Volume 6 Issue 4 CONTENTS

pdfSocial Demand and the Social Purpose of History: What is Missing from Alun Munslow’s Classification of Historiography?1

László Vörös

Insitute of History, Slovak Academy of Sciences2

Alun Munslow proposed a threefold classification of historians’ approaches to the writing of history. According to Munslow, every historian is either a reconstructionist, constructionist, or deconstructionist, depending on his/her fundamental epistemological/ontological beliefs concerning the possibilities of studying and representing the “past” in the form of narrative. I suggest that the category of constructionism as defined by Munslow is based on a priori presumptions about historians’ alleged beliefs in the ontic nature of the “before now” and its knowability. The actual practice of scholarly history writing allows for a more nuanced typology. I argue for a looser association of formal and methodological criteria with the basic ontological/epistemological positions of historians. I also argue that Munslow’s category of constructionism should be split into two ideal-typical categories: constructionism-proper and constructionism-improper. His deep insight into the formal aspects of history representation notwithstanding, Munslow’s theory fails to explain why there are such diverse and completely contradictory epistemologies within a single discipline. Neither does it explain the seemingly paradoxical continued domination of (in Munslow’s view) two fallacious epistemologies: the reconstructionist and the constructionist. Why has reconstructionism, the most obsolete of the three epistemological positions, not vanished after many decades of intense criticism? I suggest that we should look for answers in the extra-disciplinary domain of the social functions of history. I argue that the social purpose of the knowledge produced by historians and the interaction between historians and the public have a decisive formative influence on both the theory and the practice of the discipline. Historians who fit into the epistemological categories of reconstructionism and constructionism-improper are able to provide accounts that legitimize social institutions, political regimes, economical systems, social orders, etc. Even more importantly, the histories constructed by this kind of historian often serve to anchor narratives (of self-identification) connected to referential social groups and categories. I suggest that reconstructionist and constructionist-improper historians can serve these societal functions because their accounts are based on realist-empiricist epistemologies congruent with naïve perceptions of the “past.” Furthermore, the constructionist-proper and deconstructionist historians not only do not offer legitimizing or identification narratives, their narratives of history are based on counterintuitive epistemology informed by constructivist social scientific theory. Their analyses often deconstruct the very notions upon which legitimizing and anchoring discourses are based. I suggest that the social functions of historical knowledge are thus an aspect that must be incorporated into epistemological studies of history and historiography.

Keywords: Social functions of history, Alun Munslow, epistemology, reconstructionism, constructionism, deconstructionism, self-identification, anchoring

In his works,3 philosopher of history and historian Alun Munslow has masterfully introduced the main themes of the philosophy of history in the past half-century. Taking first and foremost the ideas of postmodernist and narrativist philosophers of history as his point of departure, he argues coherently against the tenets of traditional historiography concerning the object of historical studies, the practice of historical research, and the results of the scientific practices of historians. He proposes a threefold classification of epistemological approaches which should be applicable everywhere where the European model of history writing functions in an institutionalized form. In Munslow’s view, each and every historian follows either the reconstructionist, constructionist, or deconstructionist approach to the study of the past and the writing of history.

Like any classification or typology, Munslow’s has been subjected to various critical assessments. Munslow’s classification does indeed have weak points. However, the gravity of these weaknesses depends on the perspective from which we approach his typology of historiographical epistemologies and the purposes to which we wish to use it. Several authors, approaching it from the perspective of the philosophy of history, ontology, and epistemology, have expressed objections. I will briefly mention one of them. These objections concern definitional problems with the category of constructionism, and they in no way belittle Munslow’s work. They merely amend it.

However, Munslow aspires to do more than merely contribute to the philosophy of history. His main goal is to promote the deconstructionist approach to pursuing research on the past and the writing of history. The reconstructionist/constructionist epistemology in his view has fundamental problems. Historians falling into these categories are, according to Munslow, living in an illusion according to which they (and historiography in general) are producing truthful scholarly knowledge. Munslow (and he is far from being alone) thinks that the writers of history and history writing in general need to disabuse themselves of this delusion.4 Thus, his threefold classification is meant to be more than a mere disinterested taxonomy; it is supposed to be used as an analytical tool to help achieve this goal. From this perspective, I think his classification suffers from several deficiencies and omissions which are much weightier. Though I agree with major parts of his reasoning, I am skeptical about the analytical strength and potential of his threefold classification. The first weak point in this respect is the same as the shortcoming mentioned above: the category of constructionism is based on mistaken definitional premises. Moreover, to speak only about constructionism is an oversimplification. One can conceptualize at least two ideal-typical versions of constructionism, both on epistemological and on practical bases. The second weak point is that Munslow uses a rather narrow conception of epistemology. He makes the central reference point of his classification the question of the ontic status of the past and historians’ presumed belief in or skepticism concerning its objective form.

From philosophical point of view, this might be legitimate and unobjectionable, but if the goal is to study and understand the professional (scholarly) history writing in its complexity, some other aspects need to be taken into consideration. For instance, Munslow’s classification cannot explain why there are within one discipline such diverse and completely contradictory epistemologies—a rather unique occurrence even within the humanities, let alone the social sciences. Nor can it explain the seemingly paradoxical continued domination of (in Munslow’s view) two fallacious epistemologies: the reconstructionist and the constructionist. And particularly, it fails to explain why reconstructionism, the most obsolete of the three epistemological positions, did not vanish after many decades of intense and plausible criticism coming not only from philosophers of history, but also from historians themselves.

In the case of the humanities and particularly historiography, the social purpose of the knowledge produced by scholars and the interaction between scholars and the public have a decisive formative influence on both the theory and the practice of the discipline. The purpose and social functioning of historical knowledge is thus an aspect that must be incorporated into the epistemological studies of history and historiography. Munslow’s classification is useful because, even if with some flaws, it comprehensively identifies what we are dealing with when we speak about the fundamentals of history writing in the twentieth and twenty-first centuries. Munslow reveals the problems and offers remedies, but he is not paying adequate attention to the question “why?” Munslow’s classification fails to offer any explanation (nor does it attempt to offer any explanation) of why the “problematic epistemology” (i.e. reconstructionism) remains dominant, despite decades of persuasive critiques of the premises on which it rests. Thus, it remains little more than an inspiring but imaginative and exceedingly ideal-typical typology with a rather limited potential as an instrument in the analyses of historiographical practice past and present.

The most elementary question of the epistemology of history is ontological: What is the object of historical study and how does it exist? If the object of historians’ interest is the “past,” or, more specifically, “the connections between events and human intention or agency in the past,” how does this past exist in the present?5 There is a consensus that the “past” (what happened “before now”) is non-existent in any present, however, there are material remnants in the form of sources. This consensus, nevertheless, begins to show fissures when the following questions are raised: is the past in any way objectively structured? Are historians really studying the “past,” or are they “merely” studying people’s ideas about what happened? What about chronological ordering, historical fact, and historical event? Are these natural “building blocks” of the “past,” i.e. manifestations through which one can shed light on its otherwise hidden structuring? Or they are rather the constructs of historians? Are the sources repositories of truth about the past? Is there an objective, i.e. observer-independent truth which can be discovered by historians and told (narrated) to others? Is there a direct correspondence between the events of the past and the narratives (i.e. history) about them? Is the language used by historians a transparent tool for conveying information, or does it have a formative influence, whether historians are conscious of it or not? Does the way the narrative is told have any formative impact on its meaning? Does the subjectivity of historians (the social, cultural, educational, and psychological determinants) influence their narratives of the past? If so, is it possible (or necessary, or desirable) to eliminate or at least regulate these determinants and influences?

These are some of the questions that have preoccupied philosophers of history over the course of the past half-century. The answers historians have given to these questions place them into one of Munslow’s three categories (or genres) of history writing. In the following, I will offer a brief outline of Munslow’s threefold classification and some of his main points.

Reconstructionist historians presume (usually implicitly) that what happened in the past had a given form which is discoverable and can be truthfully represented through narratives. In principle, if the conditions are right (i.e. if there are sufficient sources and the researchers are skilled and adequately trained), historians should be able to uncover and reconstruct the course of events and narrate them objectively “as they actually happened.” Munslow characterizes the reconstructionists as hard-core empiricists and (naïve) realists. The former means that reconstructionist historians consider the sources remnants and specimens of the past which contain self-evident facts about the past. Historians merely use their talents and abilities to extract and process these facts, putting them into the correct order and thus arriving at a disinterested and truthful interpretation of what actually happened. The absolute primacy of the study of sources is informed by a realist vision of the past: “Realists … [are saying that] … the past must exist regardless of whether there are any historians just as mountains exist regardless of whether there are mountaineers or geographers.”6 In other words, reconstructionist historians, whether consciously or unconsciously, are objectifying/reifying the “past.” They tend to think about “historical events” as if they were objective entities, unique and fixed, observable and describable. It should come as no surprise, then, that reconstructionists endorse a concept of truth that is congruent with the correspondence theories of truth, meaning, and knowledge. Reconstructionist historians also look with suspicion on interdisciplinary imports into the workings of historiography. Social theories used in historical research are viewed as deviations which artificially try to force “structures,” “regularities,” or “laws” upon the past. The use of theories leads to violation of the past “reality,” deformations of heuristics and interpretation, and eventually the ideologization of history.7

Theory, or no theory? The answer given to this question is what differentiates the constructionist historians from reconstructionist historians the most. According to constructionists, human acts and behavior in the past are too complex to be interpreted correctly without a proper conceptual apparatus and theoretical background. The Annalistes, the Marxist/neo-Marxist schools, and the various schools inspired by theories of modernization are, according to Munslow, constructionists.8 Constructionist historians, in contrast with reconstructionists, do not endorse the correspondence theory a-critically: “Constructionists generally are aware that their narratives do not automatically mirror the reality of the past and that objectivity (at least as understood by reconstructionists) is impossible.”9 Yet, there is a crucial point on which constructionists are in agreement with their reconstructionist “cousins,” as Munslow labels them,10 and that is the belief in the objectivity of the past. In other words, even if constructionists admit that we might never know “wie es eigentlich gewesen,” they insist there is one ultimate truth about the past. According to Munslow constructionists believe in the existence of objective structures and patterns which can be studied and revealed with the help of social theories and models. This very much reminds one of the reconstructionist objectification/reification of the “historical facts” and “historical events.” Similarly, the constructionist understanding of the ontology and epistemic value of the sources resembles the reconstructionist views. In fact, Munslow often treats both categories as fundamentally one: “reconstructionist/constructionist.”11

Deconstructionists pay much more attention to the person of the historian and the factors which determine him/her. There is no inherent meaning hidden in the sources, nor is there a truth about the past. Historians do not observe and reconstruct the events of the past. On the contrary, they construct narratives about events or aspects of events which took place in the past. The writing of history is essentially a process of literary representation, not an unbiased objective description of how things actually happened. This does not mean that the deconstructionists would deny that there is information in the sources. The deconstructionist “argument is that knowing what happened does not tell you what it means.”12 And it is in the process of giving meaning, i.e. representing, that the subjective, contingent, ideological, and fictive elements enter the narrative of history. “The point of deconstructionist history is the challenge it throws down to the idea, which reaches its ultimate expression in hard-core constructionism, especially of the statistical variety, that there are essential (true) patterns ‘out there’ to be discovered in the past.”13 According to this view, the past can be best understood as an inherently meaningless unbounded heterogeneous stream of happening within which human action unfolded.

The historical facts are far from having an inherent true meaning decipherable on the basis of the sources. Nor are “historical events” the natural constituents of the past, as the reconstructionists and partly constructionists prefer to see them. Both facts and events are constructions, parts of the history discourse, not real and observer-independent entities. However, the most significant argument of deconstructionists and the one that is still provoking bitter responses from practicing historians concerns the language and the form in which history is represented. With the exception of very traditional reconstructionists, most of the actors in the discipline to some extent acknowledge the subjectivity (i.e. bias stemming from social, cultural, ideological, and other determinations) of the historian as a formative factor in the writing of history. The deconstructionists go further in their claim that, in addition to the preconceptions, prejudices, and biases as influences which can never be entirely eliminated, the language and the particular rhetorical mode predominantly used by historians to represent the past (the narrative) exerts its own influence on the meanings of these representations, an influence which is beyond the control of historians. At this point Munslow, draws heavily on the works of philosophers of history Hayden White, Frank Ankersmit, Hans Kellner, Jörn Rüsen, Keith Jenkins, Louis Mink, Paul Ricoeur, and their followers. The way in which historians arrange the facts and thus create an emplotment for the story (the historical representation) bestows the narrative with meanings at a very fundamental level. According to Hayden White there are four elementary kinds of emplotment: romantic, comic, tragic, and satiric.14 Thus, the histories written by historians are, as far as the form of the narrative is concerned, either romance, comedy, tragedy, or satire. In theory, every past event can be emploted (narrated) in each of the four ways. The question of which is used is most often not the conscious choice of the historian, but rather the outcome of other discursive determinants.15

This is one of the strongest arguments of the deconstructionists in favor of the relativist, non-objectivist, non-empiricist epistemology of history, yet it is also one of the most misunderstood and ignored by historians. The human act is in itself valueless. It is neither tragic nor comic. It can be viewed as such only from a certain perspective. Every historian speaking about past events is doing so from a particular position which is determined and influenced by many discursive and non-discursive factors.16 The truthfulness of various interpretations is relative to the “regimes of truth” within which they come into being. Thus, it is not merely correspondence with the facts in the first place that serves as the basis for deciding whether a narrative is true, but the ideological background, preconceptions, and, as I will argue, the purpose the narrative of history is intended to serve.

In his Deconstructing History (first published in 1997), Munslow did not offer any concrete examples of deconstructionist historical writings. He did so seven years later in the reader The Nature of History, which he co-edited with Keith Jenkins.17 There are excerpts from the works of ten authors. Two selections are from the writings of philosophers (Hayden White and Jacques Derrida), while the remaining eight examples (from works by Greg Dening, Walter Benjamin, Richard Price, Robert A. Rosenstone, Hans Ulrich Gumbrecht, Sven Lindquist, Dipesh Chakrabarty, and Iain Chambers) differ in style and form, but they are similar in the conspicuous absence of fluent linear narrative (this does not mean, however, that they are non-narrative) and stylistic experimentation. As the editors put it, the chosen excerpts are “texts which undercut the idea of the narrator as nobody and stress the author’s creative role. Dispensing with linear narratives in favor of multi-voiced, multi-perspectival, multi-levelled, fragmented arrangements… [these authors play] …with the possibility of creating new ways of representing and figuring ‘the before now’.”18

Obviously, Munslow’s “reconstructionists,” “constructionists,” and “deconstructionists” should be perceived as ideal-typical categories. As such, they are utopias, and they can hardly be found in their pristine form in reality.19 Nevertheless, if ideal types are to be properly operable in the work of analyses, they need to be plausibly constructed. In the following, I argue that Munslow makes several assumptions which render his threefold classification problematic, especially for analytical use in the study of historiographical practice. I draw attention to some of the weak points of Munslow’s definitional approach, and I then suggest a redefinition and split of his category of constructionism into two subcategories.

Munslow places considerable emphasis on the ontic status of the past as perceived by historians, making it a sort of primary epistemological reference point of his classification. This is his most decisive criterion, through which he defines the two opposing camps: reconstructionist/constructionist vs. deconstructionist. At the same time, he downplays the importance of other factors and categorical attributes (such as research practice, methods, and approaches), reducing them to mere secondary features. For Munslow, the methods of research and the ways of acquiring knowledge serve merely as secondary “markers” with which to identify the primary epistemological feature. This is particularly noticeable in his definition of constructionism. Munslow simply assumes that historians working with theories and concepts from the social sciences believe in the objective past, much as reconstructionists do. The only easily identifiable attribute that distinguishes Munslow’s constructionists from the reconstructionists is the former’s use of social theories. At the same time, the principal feature which differentiates the constructionists from the deconstructionists is the constructionists’ alleged belief in the existence of objective (i.e. discoverable) social, economic, cultural, political, etc. patterns in the past.

For Munslow, the fact that someone conceptualizes of him or herself as a social historian who works with sociological, anthropological, psychological, and other theories to gain knowledge about various aspects of human life in the past, simply in itself serves as a decisive defining marker of the historian’s epistemological/ontological belief about the nature of the past and its knowability. The definitional tying together of these features, making one the indicator of the other, is aprioristic and exceedingly reductionist.

Another problematic aspect of Munslow’s strict classificatory approach concerns the manner in which he singles out and overemphasizes a narrowly defined criterion. Historians’ ideas regarding the ontic status of the past (past events, social phenomena etc.) often cannot be conclusively identified. Undoubtedly there are cases in which an author’s epistemological position can be safely inferred from his/her textual output. But in many cases, unless a historian makes an explicit statement about his/her standing as far as the knowability of past events is concerned, an inference will remain just a guess. Thus, it is not at all surprising that most of the authors whose writings Munslow (and Jenkins) uses as examples of reconstructionist, constructionist, and deconstructionist historical accounts made their epistemological stance explicitly clear either in the texts quoted or somewhere else.20 Only few practicing historians make an explicit statement about their epistemological points of departure, particularly concerning the very issues Munslow make a decisive definitional factor. The search for answers to such elementary ontological/epistemological questions still does not belong to the mainstream theoretical and methodological principles of the discipline. Most practicing historians do not consider raising and answering these questions a necessary prerequisite of good historical scholarship.

One might therefore have doubts about the general validity of Munslow’s three epistemological positions (genres), since their construction is based on limited and specific empirical material: the writings of historians who, by the very virtue of the fact that they have made their claims about the ontic status of the past and its knowability explicit, represent a rather rare kind. One might ask whether the validity of Munslow’s threefold classification isn’t indeed limited to the historians whose writings he analyzes. Though in the same breath I must add that my skepticism does not go that far.

Arguably it is safe to presume that most of the traditional style historical accounts which indeed are narrative (or at least largely narrative) and which deal with national histories, important figures of national history, and so on can be safely categorized as reconstructionist. The same cannot be said, however, about the histories which are informed by social theories, even if they are partly or even in large part narrative. For Munslow, such histories are constructionist and thus based on objectivist epistemological premises, very much like the histories of reconstructionists. But many historians who fit into Munslow’s category of constructionism simply because they use social theory, adopt with the theoretical body they borrow from sociologists, anthropologists, social psychologists, and colleagues from other disciplines, very strong social constructivist epistemological propositions which are in stark opposition to naïve realism and acritical empiricism of the sort that Munslow ascribes to reconstructionists and constructionists. Philosopher of history Eugen Zeleňák makes a similar point and proposes an elegant solution to the contradictions stemming from Munslow’s rigorous definitional approach.

Zeleňák21 considers Munslow’s a priori judgement about constructionism as “essentially a subspecies of reconstructionism”22 untenable, since he finds it difficult to justify such a close association of constructionists who use social scientific concepts, theories, and hypotheses with a-theoretical reconstructionism. He points out that many historians working with critical social theories and an analytical conceptual apparatus are aware that they are working with constructions which are not derived from the past but, on the contrary, are applied to (or in Munslow’s words, imposed on) the evidence.23 Following Munslow’s own argumentation and examples, Zeleňák suggests that Munslow is in fact speaking about at least two types of constructionism, one which indeed is close to reconstructionism (constructionism-I) and another which is much closer to the deconstructionist ideas about the ontic status of the past and the possibilities of knowing about the past (constructionism-II).24 Were the classification strictly based on general epistemological and ontological assumptions, Zeleňák claims, it would be more adequate to reduce the three categories to two basic epistemological types which he labels direct realism and impositionalism. Reconstructionists and constructionists-I are direct realists, since their epistemological fundaments are based on the idea that they are discovering the objective (i.e. observer independent) knowledge about past events. Deconstructionists and constructionists-II are impositionalists because they deliberately and, in accordance with the rules of scholarly conduct, impose concepts, theories and models on the information about past happenings which they are able to derive from sources, thus creating knowledge about particular aspects of past phenomena. Impositionalists do not consider this knowledge a mirror image of past events “as they actually happened.” They are aware that what they write is in many ways contingent and dependent on perspective.25

Though Zeleňák’s reduced epistemological classification might seem too general, simplicity is its advantage. If we keep the secondary “markers” of Munslow’s classification,26 strip it of its unsubstantiated assumptive aprioristic ontological/epistemological primary definitional criteria, and replace it with Zeleňák’s basic twofold categorization, we get the skeleton of a much more workable ideal-type classification.

Consequently, a readjustment of Munslow’s classification in this vein must include a reassessment of his category of constructionism/constructionist historians. If this category is to be salvaged as an analytical concept which also refers to the scholarly practices of historians, it needs to be split into at least two types, as has been already suggested. Not every historian working with social scientific concepts and theories does so in a competent way. To infer the epistemic position of a historian on the basis of a simple presence of sociological, psychological, etc. terminology or references and allusions to grand theories of social sciences in his/her writing would merely be another aprioristic mistake. In other words, some of the historians who use social scientific terminology have not adequately mastered the theory itself, let alone the episteme upon which the given theory rests. I label this category of historian constructionist-improper historians. I will return to this category later. First, let us examine the second type of constructionism, which I label constructionism-proper, in greater detail.

As already stated, constructionist-proper historians are full-fledged social constructivists. These historians usually recognize the difference between ontological and epistemological objectivity and the subjectivity of facts and observations, and they are aware of the constructed nature of social reality and the specific ontic status of social and institutional facts. They reject the Rankean “wie es eigentlich gewesen” kind of (direct realist) creed and are aware that their accounts are but contingent representations constructed from a certain perspective. At the same time, however, this kind of historian accepts the reality of cause and effect, the reality of human action and institutional agency, and the reality of social relations in the past. These things may not exist now, but they existed once. And even if it is nonsensical to think that there can be a “true reconstruction” of these events, this does not mean we cannot attain valid knowledge about social phenomena in the past by studying sources. In fact, accounts of this kind by constructionist historians are not histories in the traditional sense anymore. It is more appropriate to look at them as forms of historical sociology, historical anthropology, historical economy, historical political science, etc., as is reflected in the names of some of the historical schools and subdisciplines.

When I propose the adoption of the term constructionist-improper historians to denote a category of historians one of whose defining features is a relative inability (in no way permanent or inherent) to work properly with social constructivist theories and to grasp fully the epistemic bases of such theories, I do not mean to suggest any lack of intellectual capacity. Historians themselves never independently developed theories of social life that would become transdisciplinary because they never had to. Professional institutionalized scholarly history writing started in the nineteenth century as a discipline the primary function of which was to “discover” and “describe” the past of “nations” and the deeds of the great men, leaders, representatives of nations, etc. It was not the goal of historians to study psychological, social psychological, social, cultural, economic, political, or other general human-related phenomena. Thus, historiography did not manage to evolve into discipline that would inspire sociologists, anthropologists, psychologists, etc. in their research strategies and agenda. It was, rather, the other way around. Some historians adopted or were inspired by concepts, theories, and methods used in other disciplines of the humanities and social sciences. However, this process of drawing inspiration from and/or adopting approaches, theories, concepts, and research strategies from other disciplines never became a general feature of historians’ training. Often, a historian develops an ability to work properly with theories and concepts from other disciplines only because of his or her determination and study. In many cases, historians who accept (or have been socialized into) the constructionist idea according to which past human phenomena are too complex to be correctly interpreted without a proper conceptual apparatus and theoretical background are for various reasons not able to work properly with social theories.

Perhaps surprisingly, this phenomenon is not unique to historiography. In the early 2000s, sociologist Rogers Brubaker critically remarked that the social scientific discourse about ethnicity, race, nationalism, and identity is plagued with an “intellectual slackness” which he labels “complacent and clichéd constructivism.”27 The most characteristic feature of clichéd constructivism is intuitive and superficial use of complex concepts and theories (e.g. that of “social identity”),28 which very often leads to serious fallacies, notably essentialism and reification. In historiography, in particular the concepts of ethnicity, ethnic and national identity, ethnic group, nation and nationalism, race and racism, social group and collective action, and collective memory (to mention only a few) often fall prey to clichéd constructivism. Naturally, one can distinguish various degrees of inadequate and uninformed use of scholarly (social scientific) concepts, from the most vulgar, when historians blatantly essentialize for instance “ethnic” or “national identity” (i.e. either explicitly or implicitly they treat “identity” as an inherent feature of a historical actor or entire aggregates of the population) and/or reify social groups, categories, or classes (i.e. they endow them with ontological objectivity, speak about them as acting entities, and treat them as natural, not social, phenomena) to more sophisticated cases, when analyses which are informed by essentialist and reifying presumptions and misconceptions are concealed behind a constructivist rhetoric. I label this practice of pretended constructivism “constructionism-improper.”29

As I implied above, from an ontological/epistemological point of view each of the two categories of constructionism suggested by me is congruent with Zeleňák’s dichotomy of direct realism and impositionalism. Constructionist-improper historians will probably though certainly not exclusively be direct realists, while constructionist-proper historians will probably be impositionalists.30

So far, I have argued that if Munslow had merely typified various epistemological positions currently prevailing in historiography, his classification would count as (perhaps with some amendments, such as the one made by Zeleňák) a valuable contribution to the epistemology of history. However, since Munslow’s ambition has been to propose a general classification of the historiographical practice with special regard to elementary epistemological positions of historians, he included and aprioristically tied together features such as the use of theory in the works of historical interpretation and methods of research. I pointed to the problematic aspects of this approach, and I deconstructed the category of constructionism, splitting it into two ideal-type subcategories. Now I turn to the last question I have asked in the introduction of this paper: why did the direct realist (reconstructionist/constructionist-improper) epistemological position not vanish after many decades of intense and justified criticism, and indeed why does it arguably remain, this criticism notwithstanding, the mainstream episteme within history writing globally?

Well-known historians from renowned schools such as the Annales, Begriffsgeschichte, the Cambridge school of the history of political ideas, Marxist/neo-Marxist schools in Great Britain, France and elsewhere, Microhistory, and New cultural history, to mention only a few, are perceived as the elite of the discipline, at least within the European and transatlantic Anglophone historiographies. These historians are cited and referred to far more frequently than most.31 Nevertheless, though they have existed for decades and have undergone a process of progressive development, the schools represented by these historians (and some other schools) remain in the position of an avant-garde. The ways of thinking and working adopted by these historians, i.e. their impositionalist epistemological points of departure have not been incorporated into the discipline’s general theoretical and methodological framework, and this is also true of their methods, theories, and the themes of their research. Why have respected authors, whose scholarship and work is highly esteemed, petrified in the position of a special elite sub-genre? Why did the constructionist-proper and deconstructionist approaches to research and history writing not become (or became only to a limited extent) integral parts of the standard training of history students?

Obviously, there is no simple answer to these questions. Several closely related determinants—of a cognitive, social-psychological and social, political, cultural (ideological), economic, and institutional nature—are at play. But factors such as the outdated history education system, structural peculiarities of personal reproduction within the academic sphere, lack of resources, political/ideological influence and limitations on freedom of research etc. are secondary (not in importance, but in effect) to cognitive, social-psychological/social, and power-related (political/ideological) determinants, or to put it in other words, to the social functions and purposes of professional history writing (historiography). I contend that we should start to look for new understandings of and explanations for epistemic positions in historiography in the domain of the functionality of historical knowledge in society.

So far, following Munslow’s threefold categorization, I have been paying attention to professional historians: their ideas about the past and its knowability, their scholarly practice, and the outcomes of this practice in the form of written histories. Now, we need to turn our attention to the consumers of history, in particular the non-professional public. I believe it is relevant to ask why people need history, why it makes sense to read and remember history, why is important to teach histories in an institutionalized and controlled manner. In the following, I consider the functions of history in modern societies. I argue that it is important to consider both the epistemological/ontological positions of historians and the intuitive (pre-theoretical) epistemological/ontological assumptions of lay readers, listeners, and viewers of history when studying the practice of history writing. Both the social purpose of historiographies and to a considerable extent the practice of the discipline as such is determined by the social functioning of the socially relevant narratives about the past, which is in turn largely determined by the cognitive modalities of perception of the “before now” by human beings, at least in modern societies.

There are many conceptualizations and typologies of the functions of history in everyday social life. For instance, G. E. R. Lloyd identifies eleven aims or agendas which historians set for themselves: (1) entertainment, (2) memorializing or commemorating, (3) glorification/vilification or celebration/denigration, (4) legitimization of regimes, (5) justifying past actions and policies, (6) explaining why things happened as they did, (7) offering instruction on the basis of past experience, (8) providing records for administrative use, (9) warning, admonishing on moral or prudential grounds, (10) criticizing others’ interpretations, and (11) “just” recording the past, saying how it was.32 John Tosh or Enrique Florescano propose similar lists of the “uses” and social functions of history.33

I reduce Lloyd’s points to three general functionalities.34

The first of these is the Historia magistra vitae est function (which, I admit, is perhaps not the most fortunate label to use in this context). History, or more precisely, knowledge about some aspects of past human phenomena serves as a source of learning for present practical purposes. Niccolò Machiavelli’s Il Principe might be mentioned as one of the early prototypical examples. Machiavelli referred to particular deeds and strategies of past rulers, conquerors, commanders, and politicians to provide examples in support of his own observations regarding the nature of domination and power. Machiavelli’s approach was purely utilitarian; he analyzed past events and actors (causes and factors) in order to suggest the best course of action or a strategy for the present and future. On the other end of the spectrum are the modern scholarly works, which study past social, political, economic, etc. phenomena in order to gain critical knowledge for a better understanding of present processes and developments. Very often, these kinds of historical accounts are also intended to serve as an admonishment or warning. Not surprisingly, this tendency is most apparent in the contemporary history writings dealing with non-democratic regimes, power and domination, stereotyping and discrimination, war and genocide, crisis and collapses, etc. However, any kind of practical learning from accounts of past events and the deeds of historical actors fit under this deliberately broadly defined category, including learning about ethics and morality, social norms, etc.

The second general functionality is the legitimizing function. When speaking about legitimization through history, most informed people think first and foremost of political ideologies and the historiographies of non-democratic regimes in the first place. Marxist-Leninist, national socialist, fascist, or traditional nationalist historiographies are but the overtly explicit forms of history writing with the purpose of legitimizing. A great deal has been written about the entanglement of historiographies in the nineteenth and twentieth centuries (and even in earlier periods) with ideologies, regimes, and social and political movements.35 However, legitimization is not necessarily (even if it is frequently) ideological in the traditional political sense of the word. There are much subtler forms through which historical accounts legitimize or delegitimize ideas, ways of thinking and living, political regimes, economic systems, policies, reforms, wars, borders, claims for individual or collective rights, claims for territories, and so on.36 Theological modes of narration, reification of social concepts and categories, essentialist social stereotypes and naïve theories about motivations and conditions, common sense assertions concerning necessity, inevitability, the beneficial or deleterious effects of an act, an event, or an actor or groups or entire categories and aggregates of population (to mention just a few) are semantic constituents which serve in historical narratives as vehicles of justificatory and legitimizing meanings.

The third functionality is the anchoring function. Most people, including historians, have a tendency to “anchor” themselves in (identify with) historical narratives (usually reduced to simplified stories or bits of stories) about referential groups of which they consider themselves members. Obviously, most often the historicized referential group is a “nation” or “ethnic” or “racial” group. However, this should be considered a universal cognitive phenomenon that forms an important part of the process of an individual’s practices of identification with social or categorical groups in general.37 This social function of history was heavily institutionalized in the second half of the nineteenth century and throughout the twentieth, and it became an important factor in the processes of secondary socialization. Most of the fallacies and misconceptions (which the constructionist-proper and deconstructionist historians try so hard to deconstruct) occur in writings which serve this function, whether intentionally or not.

The legitimizing and anchoring functionalities of history (knowledge about past) seem to be indispensable and permanently present in social life. Both functions are best viewed as epiphenomena of the political and social organization of modern societies. Studies on collective memory and remembrance and studies on the politics of memory deal primarily with these two social functions of history.

An important specification needs to be added concerning the three point typology of social functionality of history proposed above. Not all the writings of historians and probably not even the majority of them actually function in the sphere of social life in one or more of the above outlined ways. There are history studies and books which will probably never have a readership larger than a few dozen or perhaps a few hundred readers. And there are studies and even books that most probably will be read exclusively by fellow scholars. Several factors determine what kinds of histories and historians will reach a larger public. Formal criteria are obvious: an accessible narrative form and socially relevant or in some other way appealing topic are probably necessary attributes of a text if it is going to reach a wider readership and audience. Other factors (closely related to the aforementioned) include institutional backing and market determinants. There is, however, another indispensable precondition to the writing of a historian ever reaching a large readership: in order to reach “the masses,” a history (whether in form of written text or vocal or visual performance or artifact) must be at least on a basic level compatible with the epistemological and ontological preconceptions of (non-professional) consumers.

In the Introduction to his The New History (2003), Munslow remarks that it is widely assumed that the reconstructionist direct realist epistemology is in fact congruent with the “common sense” approach to understandings of reality: “it is seen in the popular imagination as the only way to re-animate the past and, therefore, know what it means.”38 However, Munslow is dismissive of this idea. In his view, there is nothing natural or inevitable in the realist-empiricist epistemology. He might be right; nevertheless there seems to be strong evidence suggesting that, at least in Western cultures, people’s thinking about the past is naïvely realist, acritically empiricist, and formally narrative.39 Individual memory and remembering and the processes of construction, reconstruction, and maintenance of biographical self-narratives are based on an objectifying/reifying realist perception of past: “Memories may be the result of many retranscriptions over time, but at any given time the rememberer typically experiences them as unproblematic structures or as facts, and as external to the rememberer.”40 Individuals acquire and process semantic memories (or “reported events,” of which histories are a form) through the same cognitive operations and following the same epistemological and ontological presumptions through which they acquire and process episodic memories (or “experienced events”).41

Indeed, what Munslow calls hard-core realism-empiricism (i.e. a position characteristic of reconstructionist historians) is in my understanding nothing but an intuitive commonsense approach to thinking about “before now.” Thus, put in a somewhat simplified manner, probably most future historians begin their study of history at a university as direct realists (reconstructionists). They bring to their studies an intuitive commonsense “epistemology.” Whether in their future careers they tend towards an impositionalist position and became constructionists-proper or deconstructionist historians or remain reconstructionists or constructionists-improper depends on many factors.

At this point, we need to keep in mind that cognitive fallacies and specifically cognitive fallacies typical of the reconstructionist and constructionist-improper type of history writing are indispensable features of everyday social practice. It is a well-documented phenomenon that the human mind has an intuitive capacity to reify (i.e. objectify) particular (socially important) abstractions, social relations, and institutions. Nations, races, classes, religious denominations, and other categorically defined aggregates of people are among the most reified social entities. In the realm of the scholarly (social scientific) production of knowledge, reification and other cognitive modalities of dealing with the complexities of human societies and everyday social practice, such as essentialism, stereotyping, and entitativism, are regarded as serious mistakes and methodological failures. However, as cognitive and social psychological research suggests, these cognitive biases are practically inevitable in and indispensable to everyday social practice.42

The idea of nation as a deep historical egalitarian community of shared language, territory, customs, and culture and of a common fate would be impossible without the capacity for essentialist and reifying thought. A reifying concept of nation as an objective historical entity, an essentialist concept of nationality/ethnicity/race, and what Munslow calls a hard-core empiricist-realist vision of the past and history are all necessary components of national histories which enable them to function effectively and “naturally” as referential frames of self-identification. In other words, both cognitive fallacy and the propensity to think about the past in the same way (in the same terms and categories) as the present are necessary to bring about a sense of the fundamental realness of the historically represented past.

Constructionist-proper historians design their methodological measures and adopt critical social theories to eliminate reifying and essentialist conceptions and stereotypical notions and naïve theories from their history writing. In other words, they deconstruct the cognitive fallacies that are indispensable to the legitimizing and anchoring functionality of history. This renders the writings of many impositionalist historians difficult to read and understand to the non-professional or uninformed consumer of history. Constructionist-proper and deconstructionist historiographies are (unlike reconstructionist history writing) quite counterintuitive, and they require prior familiarity with philosophical and social scientific theoretical knowledge if one seeks to understand them fully. This usually also means that the histories written by constructionist-proper and deconstructionist historians operate outside and even in opposition to the historical discourses that fulfil (or at least have the potential to fulfil) the legitimization and anchoring functions of history.43 Reconstructionist and to a varying extent inadvertently also constructionist-improper historians serve a purpose that constructionist-proper and deconstructionist historians cannot.44

In this paper, I have argued that Munslow’s threefold classification suffers from a priori presumptions about the elementary ontological/epistemological positions of historians. This is most evident in his category of constructionism. Munslow defines each of his three historical epistemologies or genres very narrowly on the basis of historians’ alleged beliefs about the ontic nature of the “before now” and its knowability. He proposes several secondary criteria (most notably the use of critical social theories by constructionist historians) that would indicate the belonging of a historical text and its author to one of the three epistemological types. I argue for a looser association of formal and methodological criteria with basic ontological/epistemological positions of historians. Furthermore, I argue for a more flexible approach to defining those positions, in which respect I find the solution proposed by Eugen Zeleňák (two rather general categories: direct realism vs. impositionalism) more workable.

It is necessary to differentiate between historians whose accounts are almost entirely narrative or partially narrative and analytic or entirely non-narrative or narrative, but in an atypical, experimental way; between historians whose interpretations are a-theoretical and historians who use social theories. However, it is also important to draw distinctions between the ways in which historians operate with theories. The depth to which historians acquaint themselves with social theories (and their epistemic background) and the degree of adequate operationalization of theoretical and conceptual apparatuses in the writing of history are, in my assessment, relatively robust epistemological definitional criteria that cannot be ignored. Following this line of reasoning, I propose split Munslow’s category of constructionism into two types. Constructionism-improper is characterized by an inadequate mastering of theories and the “contamination” of these theories through cognitive fallacies such as reification, essentialism, entitativism, stereotyping, misleading generalizing, etc. This usually goes hand in hand with a failure to adopt social constructivist epistemological points of departure that inform most of the current critical social theory. Presumably, most of the constructionist-improper historians will be direct realists. Constructionism-proper is in fact formally congruent with the category of constructionism as Munslow originally defined it, but with an important distinction as far as the elementary ontological/epistemological position of historians falling into this category is concerned. The successful adoption of critical social theory alongside social constructivist epistemological presuppositions would indicate an impositionalist epistemological position. To put it metaphorically, a constructionist-improper historian is someone who abandons the reconstructionist positions and sets out to become a constructionist-proper type of historian, but who for some reason gets stuck somewhere on the road.

I realize that this seems an arbitrary split, and perhaps several other subcategories of constructionism could be delineated. I also admit that, like Munslow’s categories, at first sight my categories might also seem too ideal-typical for analytical purposes. Their full potential reveals itself when another important factor, which Munslow omitted altogether, is considered: the social functions of history. I argue that particular functionalities of knowledge about the past (of which historians are the primary producers and, in principle, the guarantors of its truthfulness) in the social lives of modern societies are dependent on naïve realist and acritical empiricist (direct realist in Zeleňák’s terms) thinking. Moreover, I argue that national histories in the traditional sense necessarily must be narrative, since narrative is the “natural” form through which people are inclined to make sense of their being in the past, present, and future. Furthermore, to function as natural frames of self-identification, national histories need to be based on (among other things) a reifying concept of nation and an essentialist concept of nationality, ethnicity, race, and other related social categorizations. I suggest that there is a direct connection between the social functionalities of history and the continued prevalence of the direct realist, i.e. reconstructionist and constructionist-improper modes of history writing. By including in our studies of epistemology in historiography in connection with the practice of scholarly history writing the non-professional person as a consumer of history and the social functionalities of history (and the institutionalized modes of realizing these functionalities), we can potentially gain entirely new perspectives on certain intra-disciplinary phenomena, such as the continued thriving of an obsolete epistemology despite decades of intense and plausible criticism.

 

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1 The research and writing of this paper were supported by the Slovak Research and Development Agency under the contract No. APVV-14-0644 – Continuities and discontinuities of political and social elites in Slovakia in 19th and 20th centuries; this paper is in part a product of the project Methods of investigation of the phenomena of nationalism in historical research (Interdisciplinary inspirations), which enjoys the support of the Institute of History, Slovak Academy of Sciences, P. O. Box 198, Klemensova 19, 814 99 Bratislava, Slovakia.

2 Senior researcher, Institute of History, Slovak Academy of Sciences, P. O. Box 198, Klemensova 19, 814 99 Bratislava, Slovakia; e-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

3 Munslow, Deconstructing History; idem, The Routledge Companion; idem, The New History; Jenkins and Munslow, The Nature of History.

4 It has been half a century since Hayden White gave historians the following warning in one of his famous early studies: “[One] must be prepared to entertain the notion that history, as currently conceived, is a kind of historical accident, a product of a specific historical situation, and that, with the passing of the misunderstandings that produced that situation, history itself may lose its status as an autonomous and self-authenticating mode of thought.” White, “The Burden of History,” 29. Reader edited by Keith Jenkins offers a useful overview of similar positions: Jenkins, The Postmodern History.

5 Munslow, Deconstructing History, 4.

6 Munslow, The New History, 9.

7 Munslow, Deconstructing History, 39–60.

8 Munslow categorizes several well-known historians (sociologist-historians and anthropologist-historians) as constructionists: Norbert Elias, Robert Darnton, Marshal Sahlins, Perry Anderson, E. P. Thompson, and even Anthony Giddens. Munslow, Deconstructing History, 21. For exemplification of reconstructionist, constructionist, and deconstructionist historians see also Jenkins and Munslow, The Nature of History Reader.

9 Munslow, The New History, 15.

10 Idem, Deconstructing History, 25; idem, The New History, 6.

11 Idem, Deconstructing History, 39–60.

12 Ibid., Deconstructing History, 83.

13 Munslow, Deconstructing History, 70.

14 White, Metahistory. The narrativist argument was further developed (partially independently, partially following White) by other authors as well, most notably Paul Ricoeur, Hans Kellner, and Frank Ankersmit.

15 In White’s view, the mode of emplotment the form of the historians’ explanation (formist, organicist, mechanistic, and contextualist), and the ideological dimension of a historical account (anarchist, conservative, radical, and liberal) are predetermined by the tropological prefiguration of the text (metaphor, metonymy, synecdoche, and irony). White, Metahistory, 7–38. For an accessible introduction into White’s thinking see Paul, Hayden White.

16 Munslow, Deconstructing History, 61–81.

17 Jenkins and Munslow, The Nature of History, 115–239.

18 Ibid., 115. Despite what has been said, the narrative form is dominantly present in the cited writings of the authors listed above. The use of figurative language, the tendency to quote primary (i.e. archival, iconographical etc.) sources, and the relative lack of systematic analyses resembling analyses in the social sciences make them appear at first sight closer to the reconstructionist “style” as characterized by Munslow. On the other hand, most of the authors characterized in Jenkins and Munslow’s reader as deconstructionist are evidently well-acquainted with critical social and culture theories and accept works by social theorists and consider constructionist historians as plausible (quotable) sources of knowledge, which draws them much closer to the constructionist “camp” (e.g. compare with the articles and books by Greg Dening, Richard Price, Hans Ulrich Gumbrecht, Sven Lindqvist, Dipesh Chakrabarty, and Iain Chambers cited in the reader; Jenkins and Munslow, The Nature of History, 117–34, 142–55, 171–81, 182–90, 191–97, 214–24 respectively).

19 I borrow the designation of ideal-types as utopias from the creator of the concept himself; see Weber, “‘Objectivity’ in Social Science,” 90.

20 See the reader Jenkins and Munslow, The Nature of History.

21 Zeleňák, “Modifying.”

22 Munslow, Deconstructing History, 24.

23 Zeleňák, “Modifying,” 529.

24 Ibid., 527–30. The labels constructionism I and constructionism II are mine. I introduce them here for the sake of the clarity of the later argumentation.

25 Ibid., 530–35.

26 These secondary markers are the following: (1.) the form (whether a historical writing is narrative, partially narrative, or non-narrative, descriptive, or analytical, etc.); and (2.) the research practice and methodology adopted by the authors (whether the historian’s interpretations are informed by social theory or are a-theoretical, etc.).

27 Brubaker, Ethnicity Without Groups, 3 and 38. Ian Hacking voiced similar criticism of the devaluation of the concept of social construction in his: Hacking, The Social Construction of What?.

28 Brubaker, “Beyond ‘Identity’.”

29 Obviously even this split of Munslow’s homogeneous category of constructionism might seem insufficient. Several other subcategories could be delineated. For instance, there are historians whose use of critical social theory concepts is not flawed, incompetent, or “clichéd,” but also is not consequential or thorough. To put it metaphorically, for various reasons these historians merely scratch the surface and do not fully realize the potential (at least from social scientific point of view) of their data, sources, and hypotheses in the context of the theoretical background from which they depart or to which they refer. Certainly, a handful of subcategories of this sort could be (and as a result of empirical research should be) pinned down. I propose splitting Munslow’s original concept of constructionism into “merely” two types (based not so much on Munslow’s primary epistemological/ontological criterion as on the methods of attaining knowledge) to make Munslow’s classification more concrete, yet at the same time general enough for broader analytical application.

30 Though here I would like to repeat the point I made earlier about the complexity of determining the epistemological positions of historians concerning the ontic status of the “past” and “history.” There are cases in which even Zeleňák’s general dichotomy (direct realist vs. impositionalist) needs to be applied cautiously. Presumably, every historian departs, whether intuitively or consciously, from a certain epistemological/ontological position, but this theoretical stance is not always identifiable beyond all doubt in his or her written or spoken output. In some cases, it is not possible to decide conclusively without further focused investigation (e.g. by interviewing the historian) whether the author believes in the objectivity of the “past” and the existence of an ultimate truth about past events or not.

31 At this point, I would like to emphasize that I am speaking strictly about the intra-disciplinary status of the leading historians of the schools listed. It is important to distinguish between the image of influence based on scientometric data (which might have relevance in an intra-disciplinary context) and the actual social impact (which is very difficult to quantify in objective terms and for which the data provided by scientometrics has little or no relevance).

32 Lloyd, Disciplines in the Making, 60.

33 Tosh, “The Uses of History,” 29–57; Florescano, “The Social Function of History,” 41–49; Florescano, La función social de la historia.

Also see older but still relevant studies by Hobsbawm, “The Social Function of the Past”; Mommsen, “Social Conditioning”; Schieder, “The Role of Historical Consciousness”; Faber, “The Use of History”; Finley, The Use and Abuse of History. Also see an inspiring article by A. Dirk Moses on the possible implications of Hayden White’s views on the purpose of history for the study of nationalist conflicts and the utilization of history in them. Moses, “Hayden White.”

34 I have no ambition to propose an exhausting overview of the public uses of history. I omit some of Lloyd’s points—particularly (8), (10), and (11) —that primarily do not refer to the social functions of knowledge about the past. Also, given the spatial limitations of this inquiry, I am not paying particular attention to phenomena like “public history,” “living history,” or history reenactments, which, however, can be considered via the three general categories of history’s social functionality that I am proposing.

35 Berger and Lorenz, Nationalizing the Past; Berger, Writing the Nation; Ferro, The Use and Abuse of History; Davison, The use and Abuse of Australian History; for premodern periods see an inspiring volume Hen and Innes, The Uses of the Past; and Ianziti, Writing History in Renaissance Italy. Recent social psychological research also offers crucial insights into this functionality of discourses on the past. See a very useful introductory study to the thematic issue of the journal Culture & Psychology by de Saint-Laurent et al., “Collective Memory and Social Sciences”; Obradović, “Whose Memory and Why.”

36 I am referring to Hayden White’s concept of the “ideological implication” of historical narratives White, Metahistory, 5–7, 22–29, passim. For a lucid overview introducing the wider context of White’s thinking concerning ideology and history see Paul, Hayden White, 22–24, 69–74, 116–127. Also see Stråth, “Ideology and History.”

37 Indeed, not only social groups but any social entities in the most general meaning of the word (i.e. also communities, towns and cities, institutions, and organizations, including firms and companies). Histories of towns, companies etc., are often not written by historians out of scholarly interest, but rather in response to an initiative or a call issued by the representatives of the “entity” which desires “a history” as an indispensable part of its “identity.” Linde, Working the Past; also see Zerubavel, Time Maps.

38 Munslow, The New History, 5.

39 On the narrative structure of autobiographical and narrative (i.e. collective) memory and the cognitive and cultural aspects of their construction see Brunner, “Life as Narrative”; Fentress and Wickham, Social Memory, 51–75 and 87–143; Nelson, “Narrative and Self, Myth and Memory”, 3–28; McAdams, “Identity and the Life Story”; Fleisher Feldman, “Narratives of National Identity”; also see the recent research by de Saint-Laurent, “Personal Trajectories, Collective Memories.”

40 Quote from Prager, Presenting the Past, 215; for further elaboration of this point also see King, Memory, Narrative, Identity, 2–7 and Chapters 1 and 2; and Gergen, “Mind, Text, and Society.”

41 There are differences in how well this information is remembered and operationalized in social life. Larsen, “Remembering without Experiencing”; Neisser, “What is Ordinary Memory the Memory of?”

42 For basic information about reification see Fenichel Pitkin, “Rethinking Reification”; also see the classic Berger and Luckmann, The Social Construction of Reality, 88–92. On essentialism see: Gelman, The Essential Child; Gelman, Coley and Gottfried, “Essentialist Beliefs in Children”; Hirschfeld, Race in the Making.

On stereotyping and entitativity see: Lickel et al., “Varieties of Groups”; Yzerbyt, Corneille and Estrada, “The Interplay of Subjective Essentialism and Entitativity”; Crump et al. “Group Entitativity and Similarity”; Sherman and Percy, “The Psychology of Collective Responsibility.”

43 It is not hard to see the correlations between the functionalities outlined above and the epistemological positions of historians. Presumably, the legitimizing and anchoring function is dominantly fulfilled by the output of reconstructionist/constructionist-improper historians. The constructionist-proper/deconstructionist histories dominantly fit into the category of Historia magistra vitae est functionality of history.

44 For instance the monumental Geschichtliche Grundbegriffe (vols. 1–8, 1972–1997) by Otto Brunner, Werner Conze, Reinhart Koselleck and their colleagues, like Quentin Skinner’s Liberty before Liberalism (1998), Lynn Hunt’s Politics, Culture, and Class in the French Revolution (1984), or the classic by Eugene Weber, Peasants into Frenchmen (1977), not only do not offer legitimizing or identification narratives, but on the contrary analyze the contingent nature of social concepts and categories, the functionings of power, identity politics and construction of identity discourses, and legitimizing discourses.

Volume 6 Issue 4 CONTENTS

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Memory and the Contemporary Relevance of the Past

András Keszei

Pázmány Péter Catholic University, Institute of Sociology

As products that can be sold and bought, elements of the recent and more distant past become more and more important from the point of view of consumption, a process which adheres to the logic of commercial culture. At the same time, academic history is becoming less relevant as a source of authentic images of the past. As a result of the arbitrary selection of sources for different purposes and needs, the past has moved into our neighborhood (i.e. it has become an omnipresent part of the jumbled image repertoire of our everyday lives), and as a consequence, we find ourselves surrounded by a rather eclectic type of history. The past has become a commodity, and it has acquired a new valence as a source of collective and personal identity. Societies relate to their own pasts through the mechanisms of memory. Collective memory, as a source of social and personal identity, is partly a kind of history appropriated by the different groups of contemporary society. The manner in which this appropriation is effected highlights the potential role of academic history as a critical observer of relevant social processes in the past (and present).

Keywords: contemporary history, appropriation of the past, collective memory, social and personal identity

The past is made into history – constructed into analysis, narrated into interpretation, fashioned into stories, made serviceable as assumptions and ideas, which are then released into public circulation – in many different ways, only some of which remain susceptible to the professional historian’s influence or control. Indeed, the legitimacy of the latter’s authority has arguably become far less secure and generally acknowledged than before. As images of the recent and more distant past teem ever more chaotically across the public sphere, emanating from all manner of sites of cultural production (for example from television, advertising, magazines, museums, cinema, exhibitions, reenactments), which only rarely include universities, then the academic historian’s particular voice easily becomes drowned out, a fate which the performative successes of a few celebrity exceptions tend only to confirm.1

In 2011, the British historian Geoff Eley published an article in The Journal of Contemporary History on the changing relationship of history, memory, and the contemporary. Summing up the essence of these changes, he arrived at the conclusion cited above. According to his rather pessimistic opinion, history as a discipline can do little to prevent the commodification of the past. Seen as products that can be sold and bought, elements of the recent and more distant past become more and more important from the point of view of consumption, a process which adheres to the logic of commercial culture. The role of academic history is becoming less relevant as a source of authentic images of the past.2 Together with the changes that are taking place in the nature and sources of public culture, the use of the past to suit particular needs is a widely observable and experienced practice in an era in which the alleged validity and authenticity of history is used to secure value for an array of products. The past, not so much in the form of professional history but rather as something resulting from the arbitrary selection of sources for different purposes and needs, has moved into our neighborhood, and as a consequence we found ourselves surrounded by a rather eclectic type of history. There were of course significant variations in the aforementioned changes depending on the history of different countries.

East-Central European communist regimes strictly controlled publicness and the production of historical knowledge. On the basis of the dominant ideology, renderings of the past primarily emphasized “progressive” elements of national history which proved adaptable to relevant political needs and self-images. Control over the past was exercised through institutions which filtered the content of the history that was offered to the public. After the change of regimes, the newly established democracy, with its economic equivalent (a market economy), opened the public sphere to reevaluations of history, and alongside the clearly positive ones (removing former ideological constraints) this had some negative consequences as well. No longer under the supervision or even influence of academic history, the past suddenly began to appear in various forms and according to various, sometimes clearly biased interpretations. From the point of view of memory studies what happened came as no surprise. It was the logical result of the liberation of the past for the purpose of identification. Free access to the public sphere created a wide range of newly rediscovered elements and narratives of history for different Hungarian social groups. Instead of being the product of scientific study, theories, and methods, the past became a commodity, and it received a new valence as the source of collective and personal identity.3 Knowing for instance Hungarian society’s general indifference to and ignorance of its own past, we could add: at least for those who cared about grounding their identities in the past. Yet, although not in an explicit way, when defining themselves as members of groups (nations, confessions, ethnicities, or other kinds of social groups, for example the middle class) people always use elements taken from their collective past, known as history.4 There are important questions yet to be answered. How do people inform themselves or learn of (or devise or refashion) parts of the past that are relevant to them? Are there any specific institutions and mechanisms that help provide historical knowledge for a wider public? What kinds of roles does memory play in this process? And finally, how can we interpret the relationship of memory, history, and the contemporary in light of the problem of identity and identification in an ever-changing present? Before I try to formulate answers, I will turn to the general conditions of history and memory.

According to literary theorist Andreas Huyssen (whose opinion is very similar to that of Pierre Nora), as a necessary consequence of modernization the dissolution of the culture of unified common memory has changed the way in which people relate to the past.5 The general speeding up of life, the flow of information, and the growing frequency of motion (vertical and horizontal mobility) has increased our distance from the past, which we could consider our own, as a dimension in which we could easily navigate. Broadening the horizon of the present paradoxically has meant tightening it at the same time.6 Modern techniques can bring different parts of the world close to one another at a very rapid pace, creating a kind of synchronicity. The ever expanding horizon of the present is changing more and more quickly in accordance with the needs of the news industry and show business.7 Modern life is changing so quickly that we can hardly realize it, and the moment is over, it has become past.8 Because of this incertitude, people turn to the harmonic unity of a past allegedly governed by traditions, which does not necessarily correspond to any historical reality, though this is not really important from the point of view of the psychological need for security. A second relevant factor here is the consequence of modern urbanization. As Paul Connerton claims in a recent book, the production of urban space produces cultural amnesia. Spaces and places in modern cities are becoming more and more homogeneous and less memorable as a consequence. It is hard to anchor memories that could preserve (or be used to fashion the illusion of) stable identities in spaces in which functional requirements of traffic and dwelling prevail. Change, speed, and the deeply human psychological need of attachment to place and the preservation of identity with the help of memories—all these factors are relevant when we try to maintain an appropriate relationship with the past. As Pierre Nora observed more than 30 years ago, there are no longer milieus, which is why we need to create lieux of memory.9

First, one must consider basic differences between history and memory, as they are of particular relevance here.

Community, Emotions, Identity

Much as individuals construct their identities in the form of autobiographical memory through narratives, communities also construct narratives of self-interpretation.10 To maintain continuity and coherence, collective identity needs effective preservers and mediators.11 Because of our innate group instinct and our constant need of reliable attachments, we can consider culture as a chance to belong somewhere and not as a burden, as has been claimed by Nietzsche and Freud.12 The emotional character of memories can be partly explained by the successes and failures of the human striving to achieve appreciation, attention, and attachment. To a considerable extent, the aims and plans of our working selves concern these goals to realize a kind of social embeddedness. At the birth of communicative memory, the emotional valence of relations among individuals plays a very important role.13 Feelings of love, the longing for attachment, hate, anger, distrust, pain, shame, and guilt are inseparable from memory—indeed they are defined by memories. The role of emotions is supported by empirical results concerning autobiographical and more particularly flashbulb memory: memories accompanied by strong emotions are likely to remain more vivid than more general and less emotional memories.14 We cannot remember everything, recollection is guided by emotional relationships concerning past events. Emotional relevance creates the structure of communicative memory in the case of images and narratives.15 The desire to belong somewhere makes the individual participate in an identity mediated by collective memory. Social values and norms are written into the minds of the members of society, producing a super ego which controls their acts, constantly confronting them with social obligations.16

Extending to three generations and approximately 80 years, communicative memory survives with the help of social relationships, mediated and provided with means of preservation by society. Socialization is both the cause and effect of memory according to Assmann. However, on the long run and for larger communities it is not enough. They need a more durable form of memory on which to base their identities, namely cultural memory, which mediates the contents of the official canon.17 In this case, society reaches back to a “reality” beyond communicational memory, a “reality” that is not necessarily a truthful one, because “truth” could make identification problematic. Compared to the relativistic view of history, taking into consideration different perspectives on the past, myths, legends, and only partly true renderings of the past in the form of memory, they have basically only one valid interpretation, namely, how emotional loading and identification can connect to each other.18 Memory has only one valid perspective on the past. It cannot bear multiple interpretations.19 Usually, we choose exemplary, patriotic ancestors with which to identify. Recalling the past as cultural heritage has the aim of promoting identification instead of the impartial study of the national past. The national past as common heritage serves present centered purposes: to convince, to strengthen and to mobilize.20 Memories of historical events may generate strong emotions, whether or not these memories are connected to personal experience. A couple of days after the assassination of president Kennedy as it could be reconstructed from the conversation between Lyndon Johnson and Martin Luther King, the time had come to have the Civil Rights Act (supported by Kennedy) accepted in the context of collective national mourning.21 Emotional reaction can serve as a dangerous weapon in the hands of political manipulation. The politics of identity can use history to produce an emotionally affected or manipulated community. We use our original essentialism, that is to say our innate disposition to attribute some unchangeable inner essence to individuals and groups.22 Considering the inner essence as a kind of an innate core can lead to a perspective from which other groups are easily be seen as so closed and strange that this perception precludes any kind of possible cooperation. There is no need to warn against the potential dangers of an identity politics based on essentialism after the tragic events of the 20th century. These dangers are all too familiar. Totalitarian regimes often used exclusion based on essentialist ideology in order to maintain the feeling and image of coherence. Whether the narrative trying to produce this coherence functions according to racial, ethnic, or class ideology is of secondary importance. The stranger is essentially a stranger by his/her race, ethnicity, or class. In the 1950s, exclusion from the working class meant a secondary social status.23 The events of 1956 could serve as very effective counter-memories of the victory and betrayal of truth and freedom. Myths of cultural memory function differently in closed, dictatorial systems and in open, democratic societies. The relationship between the archive and the canon can change with time, the former being the passive contents of cultural memory, the latter the actual cultural memory.24 Every system needs stability, which is partly provided by regularly held commemorative ceremonies (according to the calendar of national celebrations). The content of the canon, that is to say the actual cultural memory, depends on the prevailing ideology and character of the political system.25 Commemoration can be considered successful if it strengthens the feeling of collective belonging.26 Society too is able to remember, and practices of commemoration have important roles in maintaining continuity with the past and strengthening a sense (or illusion) of community, which is the main source of identity for the individual.

The Birth of History

Will an event become a chapter or only a footnote in future books on history? Spectacular events sometimes survive as chapters and sometimes only as footnotes. Why and how are they preserved (or rather fashioned as artefact, commodity, or political implement) by posterity?27 How can social memory influence the writing of history? The transmission of tradition once cultivated as living memory became more and more problematic due to radical social changes initiated by industrialization and urbanization. Society became separated from its own (vision of the) past, which returned in the form of national memory and history. The two were often intermingled in the service of identity politics. As Nora claims, with the proliferation of lieux de mémoire and communities of memory, the canon of a unified national past disintegrated.28 According to Ágnes Heller, it is due to its versatility and rejection of orthodoxy that modern civil society cannot have real cultural memory. Following the logic of identity politics, the state is trying to appropriate particular events from the past.29 Since it has become a national holiday in Hungary, October 23 (1956) has ceased to be a counter-memory. It has lost its oppositional value and people are much less aware of what they are celebrating. The more real communities there are in society, the more complicated it is for the official national canon to integrate the common past into a unified cultural memory. Professional historians have a choice: either they stay within their own territory and continue to render impartial, objective accounts of the past (or least accounts that are as impartial as their institutionalized positions as the proprietors of scientific discourse allow), or they serve memory.30 The historian is guided by the past, more precisely a certain memory of the past. He or she cannot get rid of his or her own past, in which socialization took place, neither can he/she remain unaffected by questions of identity. Even the most objective historical works attest these influences, as one immediately sees when one considers the questions and research topics which are accorded the status of “relevant.” As far as the choice of the professional historians is concerned, certainly we cannot speak of total independence or isolation from the context of national identity. However we can expect a historian to reflect on her/his own position, method, and narratives.31

History as preserved in memory can easily serve ideology and identity politics, which is why we should take a closer look at the selection of past events. Perhaps there are events that prove more significant for society as a whole.32 Even the historian is picking elements from the past in a selective way, keeping in mind the relevance of the past for the present and the future. In Hungary, for example, the tragic fall of the Hungarian State in the battle of Mohács against the Ottoman Empire in 1526 was reevaluated after World War I and the Treaty of Trianon, which was a comparable loss. However, the history of the multiethnic Hungarian kingdom can easily connect the two events, because the consequences of the first, which included changes in the ethnic structure of society, clearly contributed to the second.33 We cannot separate ourselves from the present or from those elements of the past that in the course of history became relevant for society as a whole. The need for identity both at the collective and the individual (which are interrelated) levels necessitates memory. Individual identity is always part of a greater group-level identity.34 Although perhaps not in the form of a unified, closed system of cultural memory (as Heller pointed out), but modern societies and historians as members of these societies can still have a “stock” of common memories that can be considered the basis of identification in some way or another. From the point of view of national history, the narrative positing a connection between the battle of Mohács and Trianon is partly the result of an actual widespread self-interpretation (Hungarians have endured great losses), which was supported and even fueled by the prevailing political power.

How can society select from among different historical events? What meanings will be attributed to September 11 a few decades from now? Will it be a main chapter in the books on the history of the 21st century or only a footnote? According to the findings of research concerning events of the past, there is a kind of social dynamics working in communities which make memories durable.35 Generally, we can better recall unexpected, spectacular, shocking events, but only events which remain relevant endure as memories because they brought about significant changes in people’s lives and they have been used in the fashioning of a positive image of the community.36 According to the results of a follow up study in the US, in the future September 11th is more likely to be considered an important chapter in history than the Gulf War, which did not prove to be that significant after all, despite the overall effect of the media coverage of the war. The streets of American cities were empty because people stayed home and watched the war on TV. In the beginning, it seemed (at least according to the official rhetoric) that an international coalition emerged after the fall of the Soviet Union which would fight for freedom, justice, and democracy. One year later, however, the troops returned home, Saddam Hussein was still in power in Iraq, and there was no consensus on the part of the democratic powers about the aim of the war. Were they fighting for oil or democracy? To sum up, as far as its consequences were concerned this war was not significant.37 At the same time September 11th, in addition to being directly relevant to many people, produced very strong negative emotions, fear, worry, and incertitude in American society. Based on the analysis of 75,000 blogs, scholars claimed that after the first shock people were seeking the company of family and friends and tried to share their experiences in order to distance themselves from the experience. As a result, it became a shared, collectively formed, and later collectively recalled common memory, thus more and more a real collective memory.38 Switching to a “we mode”, people more frequently used the personal noun “we”, and they were more attentive to each other. Conversely, we have ample evidence of the fact that the lack of mutual support after a tragic event produced negative effects, for instance in Chicago after the 1871 fire or in Dallas after the assassination of Kennedy, events which were followed by a significantly higher death rate. For those who were directly affected by a shocking event it was more difficult to get over it. They faced the difficulty of finding an appropriate form of communication for traumatic memory. I would make one last point concerning the audience. If there is a compassionate, attentive audience then it is always easier to communicate shocking experiences as memory narratives.39

According to psychological research, past events can be best integrated into memory between the ages of 13 and 25. Adolescence and early adulthood are particularly important from the point of view of identity formation.40 We retain significantly more memories from this period than from other periods. For those who experienced World War II as young adults, September 11, 2001 was less significant than it was for younger generations. There are differences concerning possible future communicative memories as they have been theorized by Halbwachs and Assmann. They are not equally suitable as potential cultural memories. Events and celebrated personalities once considered significant might loose their appeal for society. Some of them become marginal, since they cease to be the source of consensus because they are highly disputed. Instead of symbols, they are rather seen as burdens. One could take Christopher Columbus as an example. First, he was celebrated as a hero. Then, his fame was overshadowed by new discoveries, but in the mid-16th century he began to become popular again. In the 18th century, he was considered a national hero in the United States, but by the end of the 19th century he was simply associated with important discoveries. At the same time, in France Columbus was seen as one of the greatest Christian missionaries. By the middle of the 20th century, however when the colonial past had become a burden for democratic societies, his name was frequently used in the context of imperialism and even genocide. No surprise that the 500th anniversary of his arrival in the Americas was not really celebrated and indeed was almost ignored.41

The same events can be remembered in different ways. World War II is generally evaluated negatively by Poles and neutrally or positively by Russians (mainly members of the older generations). According to the American psychologist James Wertsch, there are schematic narrative templates which represent a general view of history and guide the interpretation of national history without going into details. Russian history, for example, is represented in the minds of ordinary Russian people according to the following simple schema: Russia was always a peaceful country, which was suddenly invaded by foreign powers and suffered huge losses; through heroic fights, Russia finally triumphed over its enemies. We can discover elements of academic history in this scheme, though in a very simplified form. The public use of history reminds one of the functioning of memory: it is constructed by the needs of identity. The Hungarian version of the schematic narrative template reflects another narrative deep structure of collective memory which is centered around losses and inevitable failure. Collective identity is strengthened by mourning, which can be dangerous if a society has not worked through earlier experiences. Continuous reliving of the past can produce an inflexible identity firmly attached to the past. What is the relevance of the schematic structure when we try to concentrate on memory, history, and the contemporary?

For me, the schema represents the contemporary intersection of history and memory in the service of identity. Professional history, in addition to producing and reconstructing data and facts in a scientific way and establishing the interrelationships among facts, perhaps in a less scientific manner often provides a kind of a raw material for the public. In order to be applicable to the purpose of identity construction, history is used in a highly selective way. The source of selection is identity. The collective self-image of societies and of respective social groups cannot do without reliable historical material because to some extent it has to be anchored in real events and places. The meaning of these events and places is not determined by history alone, it can change according to eventual identity claims. Contemporary relevance necessarily results in oversimplification. Objective, impartial accounts of the past are problematic because they cannot always be easily integrated into personal and collective identity, which are better adapted to the schematic interpretations of history. As I mentioned earlier, identity as a multi-layered phenomenon has more facets. The historical layer, which become manifest in the form of narratives, is the eminent source of identity as a collective entity. This collective identity seeks a favorable self-image and, as a result, has a highly selective, perspectival character, playing down aggression, for example, on behalf of the state and community. A narrative deep layer of Hungarian history’s collective memory emphasizes pointless struggle and inevitable failure.42 Considering the great endeavors in Hungarian history, this picture is not unrealistic. Collective identity can be mainly strengthened on the basis of common mourning for the past 500 years. Again, if a society has not worked through its past, excessive mourning can lead to ceaseless reliving and to an inflexible identity that rigidly adheres to the past.43

20th-century history is a huge repository of traumatic events. There is much to mourn. In Hungary (as in many other countries, especially in those of the multi-ethnic region of Central Europe), there are hardly any social groups which did not suffer considerable losses over the course of the previous century: wars, genocide, executions, the Treaty of Trianon, deportations, population exchange, violent collectivization – mainly as a result of political regimes based on ideologies. Ethnic, confessional, and social groups of a great variety fell victim to these powers and ideologies.44 As many 20th-century biographies indicate, losses and traumas are here to stay in the aloof and isolated victims and in their offspring.45

For the time being, traumatic experiences have more real consequences at the level of personal traumas. In an atmosphere of mistrust, they cannot become common cultural traumas which are widely admitted in society after the act of self-inspection, which potentially can lead to a clearer social conscience, stronger social solidarity, and perhaps even the transformation of collective identity. This is not an easy task, however, because it is often hard to find an impartial “third side” that would create the necessary condition for the social interrogation of the traumatic events by providing objective information on these events for a wider public.46

Groups, Pasts, and Relevance

With the changing relationship between history and “truth,” academic history has become merely one version among many, and it is less and less suitable for the purpose of identity politics. Fueled by the singular emotional perspective of collective memory, identity can renew itself also on the basis of losses and mourning. As society is broken up into several memory groups, macro level inquiries are likely to give way to micro level investigations. With the increasingly widespread confession and recognition of sufferings and losses, and with their increasingly central role in history and international relations, the micro level gains ascendency over the super-individual, and this makes it possible for professional history to connect individual and collective history with the mediation of microhistory.47 This is increasingly seen as a moral duty for academic history.

The real significance of an event taking place in a society unfolds only afterwards, depending on whether or not it has the potential to change society as a widespread communicative memory. It is also important to know how a given community is characterized by the memories that anchor our collective identity. Flashbulb memories, identified in the late 1970s by researchers, are the consequences of the very exact and detailed recollection of extraordinary events. These types of memories are particularly vivid regarding the time and circumstances of certain events, events that were extremely important for the subject even in the moment in which they happened, as if someone actually had turned a light on to see things better. Flashbulb memories, however, do not have equal relevance for each social group. As it turned out in the 1970s, when this type of memory was discovered, the assassination of Martin Luther King was much more of a flashbulb memory for African Americans than it was for others. The same applies to September 11, 2001 in an international context: US citizens were much more affected than others. 48 Being closed within their ingroups, people react differently, and they are prone to overlook the faults of the members of their groups more easily than they will overlook the faults of members of so-called outgroups.49 Given this bias, one of the most important social functions of memory would be to remind us to our duties, which we can construe as obligations which provide us with what we as communities tend to allege as moral character. 50 As we have seen, alongside notions of past glory, tragedies can also be subjects of social memories. The result is more or less the same in both cases: strengthening group solidarity, emphasizing the mutual commitments of members and the outlines of the group itself. Our victories and our sufferings are construed as unique, and they belong only to us, no one else can possibly understand them.51 Recently, the growing wave of apologies on the international scene directs our attention to the potentially positive consequences of giving up rigid “ingroup positions” and emphasizing the importance of a notion of the mutually accepted common fate of the international community.52 In order to create peaceful relations, we surely have to begin working through our (real or imagined) grievances. It is not clear, however, whether our incorporated conscience (which has a deep social origin in the form of common rules) would be willing to undergo an overall self- inspection, or only a limited one relating to the past of its own society.

*

The interrelated nature of memory, history and identity is one of the most important phenomena for every past and present society and consequently also for those studying social groups in the present and the past. As for the future, this interrelation seems to be so deeply rooted in human nature that we are hardly able to get rid of it. It is an interrelation which is highly relevant both for the social sciences and the humanities. Using the results of psychological and anthropological research, we can better understand the role memory and identity have played in historical processes both at the national and the international level. Interdisciplinary cooperation of the social sciences (above all psychology and anthropology) and history can help us make sense of the way people as members of groups relate to one another in time by the means of memory and through identification.

After these general statements, I should return to the problems I originally raised, namely the relationship between history (historical writing) and memory (individual, collective and cultural). Following a functional approach, one can identify one of the main tasks of memory as providing a tool with which to travel, mentally, in time, i.e. a means of summoning (or crafting while appearing to summon) information from the past.53 Past knowledge can serve many practical purposes in our everyday lives, but humans have one particular need that we cannot do without as individuals living in societies: identities. Some information from the past is only relevant for us because it concerns who we are. Self-definition and self-image have more than a merely decorative role here. In order to be able to live in society, we need to have a coherent self consisting of more or less reliable self-knowledge provided by our memories of ourselves in earlier times.54 This view can be considered general among psychologists. As it was formulated by neuroscientists:

 

We are not who we are simply because we think. We are who we are because we can remember what we have thought about. ... Memory is the glue that binds our mental life, the scaffolding that holds our personal history and that makes it possible to grow and change throughout life. When memory is lost, as in Alzheimer’s disease, we lose the ability to recreate our past, and as a result, we lose our connection with ourselves and with others.55

 

If memory is so important in the life of the individual it surely has some significance in the lives of social groups as well. The overlap of personal and collective, historical, cultural memories in the course of self-definition, for example in the case of defining ourselves as individual members of a national and/or a religious community, highlights the interconnected nature of individual and collective identity as a result of their common supra-individual sources for identification, consisting of history and, broadly speaking, cultural memory. 56

Considering the issue from the perspective of history writing and, more particularly, contemporary history, one is prompted to ask whether or not there are any relevant consequences. The notion of the present as having a constantly moving horizon can lead to definitional problems and eventually to impasses.57 Either we live in the eternal present or, seen from the opposite extreme position, there are only vanishing seconds for the present between past and future. Accepting a realist view of time, with duration and succession, we can attempt to conceptualize and reconstruct past, present, and future. We can speak about past pasts, presents, and futures, present pasts, presents, and futures, and of course of future pasts, presents, and futures as well, based on the mutual relationship among these time dimensions.58 Using this conceptual tool, we can avoid the traps of the eternal presentism of our own time without losing the advantage of being able to study every historical period as contemporary history with possible perspectives from the past and the future. The problem, however, with the actual present in which we live and the contemporary history of this present is its unsettled, unfinished character, which makes it very difficult to interpret in clear cut time dimensions. So the question—and it is a very troubling question indeed—is whether or not we can identify our present position. I think that the functional approach to memory both at the individual and the social level can help solve this problem. If we take the general human need for self-consistency into consideration, the interconnectedness of memory and identity shed light on the overall context of historical writing. Actual self-definition and future planning serve as the basis of society’s interpretation of its own past. However, society in itself cannot produce these interpretations without historical contents formulated by the science of history. Political forces and influential intellectuals exert a kind of distortion when they use the “raw material” of academic history for the purpose of strengthening identity and feelings of belonging. Professional historians, mainly those who research the recent past, often feel obliged to react to out-of-context interpretations and distortions in order to defend their position as the legitimate producers of historical knowledge. Since history in its scientific form is less appropriate for identity purposes, we can claim that there is a necessary inconsistency between the two.59 The actual present helps orient people with the support of common historical, cultural memories. It provides a kind of anchor for definitions of the present through memories and a point of departure towards the future. The context of contemporary history is heavily influenced by the past in the form of memories, both for the wider public and for historians. The influence is manifold, for it reflects social needs and political aspirations, as well as the research areas of the study of history.

These interrelationships notwithstanding, there are significant differences between public and scientific interpretations of the past. Defined by the brokered memories of professional historians, history is expected to be reflective at least, i.e. to reflect on its own topics, methods, and narratives, as well as its position and functions within society. With the help of social scientific concepts and methods, which are especially relevant in the case of contemporary research, history can strengthen its position as a practice of critical observation of social processes and production of scientific knowledge.

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Assmann, Jan. “Globalization, Universalism and the Erosion of Cultural Memory.” In Memory in a Global Age, edited by Aleida Assmann and Sebastian Conrad, 121–37. Basinstoke: Palgrave Macmillan, 2010.

Barclay, Craig R. “ Autobiographical Remembering: Narrative Constraints on Objectified Selves.” In Remembering Our Past, edited by David C. Rubin, 94–125. Cambridge UK: Cambridge University Press, 1995.

Blatz, Craig and Michael Ross. “Historical Memories. ” In Memory in Mind and Culture, edited by Pascal Boyer and James V. Wertsch, 223–37. New York: Cambridge University Press, 2009.

Boyer, Pascal. “What Are Memories For? Functions of Recall in Cognition and Culture.” In Memory in Mind and Culture, edited by Pascal Boyer and James V. Wertsch, 3–28. New York: Cambridge University Press, 2009.

Bögre, Zsuzsanna. Asszonysorsok [Female fates]. Budapest: Ráció Kiadó, 2006.

Braham, Randolph C. A népirtás politikája: A holokauszt Magyarországon [The politics of genocide: The Holocaust in Hungary]. 2 vols. Budapest: Belvárosi Kiadó, 1997.

Christianson, Sven-Ake, and Martin A. Safer. “Emotional events and emotions in autobiographical memories.” In Remembering Our Past, edited by David C. Rubin, 218–43. Cambridge UK: Cambridge University Press, 1995.

Connerton, Paul. How Societies Remember. Cambridge UK: Cambridge University Press, 1989.

Connerton, Paul. How Modernity Forgets. New York: Cambridge University Press, 2009.

Conway, Martin A. “Memory and the Self.” Journal of Memory and Language 53, no. 4 (2005): 594–628.

Csáky, Moritz. “Die Mehrdeutigkeit von Gedächtnis und Erinnerung. Ein kritischer Beitrag zur historischer Gedächtnisforschung.” Accessed November 11, 2017. (http://epub.ub.uni-muenchen.de/603/1/csaky-gedaechtnis.pdf) In. Digitales Handbuch zur Geschichte und Kultur Russlands Chapter 9. Accessed November 11, 2017. (http://vifaost.bsb-muenchen.de/texte-materialien/handbuch), 2004.

Eley, Geoff. “The Past Under Erasure? History, Memory and the Contemporary.” Journal of Contemporary History 46, no. 3 (2011): 555–73.

Erdelyi, Matthew Hugh. “Forgetting and Remembering in Psychology: Commentary on Paul Connerton’s ‘Seven Types of Forgetting’.” Memory Studies 1, no. 3 (2008): 273–78.

Erős, Ferenc. Az identitás labirintusai [Labyrinths of indentity]. Budapest: Janus–Osiris, 2001.

Erős, Ferenc. Trauma és történelem [Trauma and history]. Budapest: Jószöveg Műhely Kiadó, 2007.

Esposito, Elena. “Social Forgetting: A Systems-Theory Approach.” In Cultural Memory Studies, edited by Astrid Erll and Ansgar Nünning, 181–89. Berlin: Walter de Gruyter, 2008.

Feindt, Gregor, Félix Krawatzek, Daniela Mehler, Friedemann Pestel, and Rieke Trimcev. “Entangled Memory: Toward a Third Wave in Memory Studies.” History and Theory 53, no. 1 (2014): 24–44.

Gabriel, Joseph M. Introduction: History, Memory and Trauma. Traumatology 15, no. 4 (2009): 1–4.

Giesen, Bernhard. “Social Trauma.” In International Encyclopedia of the Social and Behavioral Sciences, edited by Neil J. Smelser and Paul B. Baltes, 14473–76. Amsterdam: Elsevier, 2001.

Gil-White, Francisco. “Are Ethnic Groups Biological ‘Species’ to the Human Brain?” Current Anthropology 42, no. 4 (2001): 515–54.

Gyáni, Gábor. Az elveszíthető múlt [The losable past]. Budapest: Nyitott Könyvműhely, 2010.

Halbwachs, Maurice. Les cadres sociaux de la mémoire. Paris: Librairie Félix Alcan, 1925.

Halbwachs, Maurice. La mémoire collective. Paris: Les Presses universitaires de France, 1950.

Hartog, François. Regimes of Historicity: Presentism and Experiences of Time. New York: Columbia University Press, 2015.

Haslam, Nick O. “Natural Kinds, Human Kinds, and Essentialism.” Social Research 65, no. 2 (1998): 291–314.

Heller, Ágnes. “A Tentative Answer to the Question: Has Civil Society Cultural Memory?” Social Research 68, no. 4 (2001): 1031–40.

Heller, Ágnes. Trauma. Budapest: Múlt és Jövő Kiadó, 2006.

Huyssen, Andreas. Present pasts: Urban Palimpsests and the Politics of Memory. Stanford, California: Stanford University Press, 2003.

Jenkins, Keith. “Introduction: on being Open about our Closures.” In The Postmodern History Reader, edited by Keith Jenkins, 1–30. London–New York: Routledge, 1997.

Kansteiner, Wulf. “Finding Meaning in Memory: A Methodological Critique of Collective Memory Studies.” History and Theory 41, no. 2 (2002): 179–97.

Koselleck, Reinhart. Zeitschichten – Studien zur Historik. Frankfurt am Main: Suhrkamp Verlag, 2000.

Lambert, Alan J., Laura Scherer, Chad Nesse-Rogers, and Larry Jacoby. “How Does Collective Memory Create a Sense of the Collective?” In Memory in Mind and Culture, edited by Pascal Boyer and James V. Wertsch, 194–217. New York: Cambridge University Press, 2009.

Levi, Giovanni. “Historians, Psychoanalysis and Truth.” In Between Sociology and History, edited by Anna Maija Castrén, Markku Lonkila, and Matti Peltonen, 71–86. Helsinki: SKS/Finnish Literature Society, 2004.

Losonczi, Ágnes. Sorsba fordult történelem [History turned into fate]. Budapest: Holnap Kiadó, 2005.

Lowenthal, David. The Heritage Crusade and the Spoils of History. Cambridge UK: Cambridge University Press, 1998.

Lowenthal, David. The Past is a Foreign Country-Revisited. Cambridge UK: Cambridge University Press, 2015.

Mahalingam, Ramaswami. “Essentialism, Power, and the Representation of Social Categories: A Folk Sociology Perspective.” Human Development 50, no. 6 (2007): 300–19.

Matuska, Márton. A megtorlás napjai [Days of retribution]. Újvidék: Graphic Kiadó, 2008.

Nora, Pierre. “Between Memory and History: Les Lieux de Mémoire.” Representations 26, no. 2 (1989): 7–24.

Olick, Jeffrey K. “From Collective Memory to the Sociology of Mnemonic Practices and Products.” In Cultural Memory Studies, edited by Astrid Erll and Ansgar Nünning, 151–61. Berlin: Walter de Gruyter, 2008.

Olick, Jeffrey K., Vered Vinitzky-Seroussi, and Daniel Levy. “Introduction.” In The Collective Memory Reader, edited by Jeffrey K. Olick, Vered Vinitzky-Seroussi, and Daniel Levy, 3–62. New York: Oxford University Press, 2011.

Ö. Kovács, József. “‘Ekkora gyűlölet még nem volt a falunkban, mint most.’ Szövegek és kommentárok az erőszakos kollektivizálás befejező hullámáról” [‘Never was such hate in our village before.’ Texts and commentaries on the final wave of forced collectivization]. Századvég 47 (2008): 37–69.

Pataki, Ferenc. “Kollektív emlékezet és emlékezetpolitika” [Collective memory and rememberance politics]. Magyar Tudomány 171, no. 7 (2010): 778–98.

Pennebaker, James W., and Amy L. Gonzales. “Making History: Social and Psychological Processes Underlying Memory.” In Memory in Mind and Culture, edited by Pascal Boyer and James V. Wertsch, 171–93. New York: Cambridge University Press, 2009.

Pető, Andrea. “Budapest ostroma 1944–1945-ben – női szemmel” [The siege of Budapest through a woman’s eyes]. Budapesti Negyed 29–30 (2000): 203–20.

Poole, Ross. “Memory, History and the Claims of the Past.” Memory Studies 1, no. 2 (2008): 149–66.

Ricoeur, Paul. Memory, History, Forgetting. Chicago: University of Chicago Press, 2004.

Robinson, John A. “Perspective, meaning, and remembering.” In Remembering Our Past, edited by David C. Rubin, 199–217. Cambridge UK: Cambridge University Press, 1995.

Roediger III., Henry L., Franklin M. Zaromb, and Andrew C. Butler. “The Role of Repeated Retrieval in Shaping Collective Memory.” In Memory in Mind and Culture, edited by Pascal Boyer and James V. Wertsch, 138–70. New York: Cambridge University Press, 2009.

Saád, József, ed. Telepessors [Settlers’ fate.] Budapest: Gondolat Kiadó, 2005.

Somers, Margaret. “The Narrative Constitution of Identity: A Relational and Network Approach.” Theory and Society 23 (1994): 605–49.

Squire, Larry R., and Eric R. Kandel. Memory: From Mind to Molecules. New York: Scientific American Library, 1999.

Standeisky, Éva. “A kommunista polgárellenesség” [The communist anti-bourgeois approach]. Budapesti Negyed 8 (1995): 209–22.

Szederjesi, Cecília, ed. Megtorlások évszázada: Politikai terror és erőszak a huszadik századi Magyarországon [The century of retributions: Political terror and violence in twentieth-century Hungary]. Salgótarján–Budapest: Nógrád Megyei Levéltár/1956-os Intézet, 2008.

Tóth, Ágnes. Hazatértek: A németországi kitelepítésből visszatért magyarországi németek megpróbáltatásainak emlékezete [Those who came home: Remembrance of the hardships of germans returned from forced migrations to Germany]. Budapest: Gondolat, 2008.

Wertsch, James V. “Collective Memory and Narrative Templates.” Social Research 75, no. 1 (2008): 133–56.

Wertsch, James V., and Henry Roediger. “Collective Memory: Conceptual Foundations and Theoretical Approaches.” Memory 16, no. 3 (2008): 318–36.

Wertsch, James V. “Collective Memory.” In Memory in Mind and Culture, edited by Pascal Boyer and James V. Wertsch, 117–37. New York: Cambridge University Press, 2009.

Wessel, Ineke, and Michelle L. Moulds. “How many types of forgetting? Comments on Connerton.” Memory Studies 1, no. 3 (2008): 287–94.

Williams, Helen L., and Martin A. Conway. “Networks of Autobiographical Memory.” In Memory in Mind and Culture, edited by Pascal Boyer and James V. Wertsch, 33–61. New York: Cambridge University Press, 2009.

Winter, Jay. “Historians and Sites of Memory.” In Memory in Mind and Culture, edited by Pascal Boyer and James V. Wertsch, 252–67. New York: Cambridge University Press, 2009.

Wilson, Adrian. “A Critical Portrait of Social History.” In: Rethinking Social History: English Society 1570–1920 and its Interpretation, edited by Adrian Wilson, 9–58. Manchester: Manchester University Press, 1993.

1 Eley, “The Past Under Erasure?” 555.

2 Ricoeur, Memory, History, Forgetting, 396–97.

3 About the past being “improved” for present purposes, see: Lowenthal, The Past is a Foreign Country – Revisited, 497–584.

4 The most seminal works on the relationship between social groups and memory are of course Les Cadres Sociaux de la Mémoire and the posthumous La Mémoire Collective by Maurice Halbwachs. Based on Halbwachs’ notion of social memory (but stressing mainly the role of long term cultural memories and, from this perspective, the relationship between social groups, memory, and identity), see Assmann, “Globalization, Universalism, and the Erosion of Cultural Memory,” 123. On the significance of the interpretation of memories as a dynamic process and the entangled, relational nature of remembering, see: Feindt et al., “Entangled Memory,” 27.

5 Huyssen, Present Pasts, 1–29; Olick, Vinitzky-Seroussi, and Levy, “Introduction,” 6–8; Csáky, “Die Mehrdeutigkeit von Gedächtnis,” 2; Nora, “Between Memory and History”; Hartog, Regimes of Historicity.

6 Huyssen, Present Pasts, 22–24.

7  Hartog, Regimes of Historicity, 113.

8  Connerton, How Modernity Forgets, 139.

9  Nora, “Between Memory and History.” This meant an explicitly presentist view of history, as reflected in the writings of Nora and the series Les Lieux de Mémoire, see: Hartog, Regimes of Historicity, 141.

10  Williams and Conway, “Networks of Autobiographical Memory,” 41–46; Wertsch, “Collective Memory,” 132–35.

11  For a social level application of Conway’s self- memory-system: Wessel and Moulds, “How Many Types of Forgetting?, ” 290–91.

12  Assmann, Religion, 6.

13 Pennebaker and Gonzales, “Making History,” 185–91; Lambert et al., “How Does Collective Memory Create a Sense of the Collective?,” 198–99; Assmann, Religion, 3–4.

14 Christiansen and Safer, “Emotional events,” 223, 238; Robinson, “Perspective, meaning,” 199–200. Barclay, “Autobiographical remembering,” 123: “Life is meaningful when experiences can be tied to functional affects and emotions, and one’s self is sensed as coherent when there is a useful temporal-spatial system for organizing, interpreting, and explaining life events.“

15 Assmann, Religion, 3.

16 Ibid., 6–7.

17 Assmann, “Canon and Archive,” 104–05.

18  Nora, “Between Memory and History”; Assmann, “Transformations,” 65.

19  Winter, “Historians,” 267; Wertsch, “Collective Memory,” 126–27.

20  Lowenthal, The Heritage Crusade, 88–172.

21  Lambert et al., “How Does Collective Memory Create a Sense of the Collective?,” 213.

22  Haslam, “Natural Kinds”; Gil-White, “Are Ethnic Groups Biological ‘Species’”; Mahalingam, “Essentialism.”

23  Standeisky, “A kommunista polgárellenesség.”

24 Assmann, “Canon and Archive,” 101–02.

25 Connerton, How Societies Remember, 83–88. Connerton used the notion of “habitual memory” when analyzing rites in society. Memory is written into the body so to speak. It is most effective when there is other communal, family relevance as well. See e.g. July 1 reminding people of the losses of World War I: Winter, “Historians,” 266.

26 Assmann, Religion, 11.

27 Emphasizing the role of media: Kansteiner, “Finding Meaning,” 189–95. We can formulate the following question: how would collected memories become collective memory? The emphasis is on its processual nature See: Olick, “From Collective Memory,” 155–59; Wertsch and Roediger, “Collective Memory,” 319–20.

28 Nora, “Between Memory and History.”

29 Heller, “A Tentative Answer.” E. Esposito holds a similar opinion concerning collective memory in the more and more complex societies: Esposito, “Social Forgetting,” 183–84.

30 In Hungary Gábor Gyáni wrote about the phenomenon. See: Gyáni, Az elveszíthető múlt, 68–84; 85–102.

31 See e.g. Wilson, “A Critical Portrait,” 34–35; Jenkins, “Introduction.”

32 Pennebaker and Gonzales, “Making History,” 172–75; Blatz and Ross, “Historical Memories,” 226.

33 On the tragic image of Mohács: Gyáni, Az elveszíthető múlt, 117–33.

34 Somers, “The Narrative Constitution.”

35 Erdelyi, “Forgetting and Remembering,” 276.

36 Pennebaker and Gonzales, “Making History,” 171–93.

37 Ibid., 172.

38 Ibid., 179–83.

39 Ricoeur, History, Memory, Forgetting, 505; Heller, Trauma, 14; Erős, Trauma, 23–26.

40 Pennebaker and Gonzales, “Making History,” 173.

41 Ibid., 187–88.

42 The social psychologist Ferenc Pataki about the deep layer of hungarian memory in a wertschian manner, stressing the role of inevitable failure. Pataki, “Kollektív emlékezet.”

43 Ricoeur, History, Memory, Forgetting, 79. Erős, Trauma, 17–20: About the consequences of collective traumas.

44 See e.g.: Argejó, “A hatalomnak alávetett test”; Bögre, Asszonysorsok; Braham, A népirtás politikája; Matuska, A megtorlás napjai; Ö. Kovács, “‘Ekkora gyűlölet még nem volt a falunkban, mint most’”; Pető, “Budapest ostroma”; Saád, Telepessors; Standeisky, “A kommunista polgárellenesség”; Szederjesi, Megtorlások évszázada; Tóth, Hazatértek.

45 Losonczi, Sorsba fordult történelem, 294; Erős, Az identitás, 117–18.

46 Giesen, “Social Trauma.”

47 Gabriel, “Introduction,” 4. About the danger of leaving history to non professional historians and history serving the purpose of identity, eventually the marginalization of academic history: Levi, “Historians,” 85–86.

48 Roediger, Zaromb, and Butler, “The Role of Repeated Retrieval,” 150–53.

49 Blatz and Ross, “Historical Memories,” 227–29.

50 Poole, “Memory, History,” 162–63.

51 Blatz and Ross, “Historical Memories,” 230.

52 Ibid., 230–34; Gyáni, Az elveszíthető múlt, 373–74.

53 For the functional approach and the need to study memory in an interdisciplinary way, see: Boyer, “What are Memories for?”

54 Conway, “Memory and the Self,” 597.

55 Squire and Kandel, Memory, IX.

56 See e.g. Assmann, Religion, 6; Wertsch, “Collective Memory.”

57 Koselleck, Zeitschichten, 247–48.

58 Ibid., 249.

59 See e.g. Wertsch, “Collective Memory and Narrative Templates,” comparing history and memory.

Volume 6 Issue 4 CONTENTS

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The Heads and the Walls. From Professional Commitment to Oppositional Attitude in Hungarian Sociology in the 1960–1970s: The Cases of András Hegedüs, István Kemény, and Iván Szelényi

Ádám Takács

Eötvös Loránd University, Budapest

In most of the state socialist countries in Eastern Europe, sociology remained a perpetual source of ideological quarrels from the beginning of the 1960s to the mid-1980s. With this context in mind, this paper offers an analysis of some of the decisive aspects of the development of Hungarian sociology from the early 1960s to the mid-1970s. In particular, the discussion focuses on three central figures, András Hegedüs (1922–99), István Kemény (1925–2008), and Iván Szelényi (1939), and their intellectual developments from committed and professional sociological work to the adoption of a deeply critical attitude towards socialist social development. An examination of the similarities in their intellectual development, especially as far as their political confrontation with the regime is concerned, offers a context for a discussion of some of the topical issues of the professional, institutional, and ideological aspects of academic work in state socialist Hungary and the ways in which genuine scholarly achievements could give rise to oppositional attitudes and social dissidence.

Keywords: Kádár era, Sociology, Social Criticism, Oppositional Attitudes, András Hegedüs, István Kemény, Iván Szelényi

In most of the state socialist countries in Eastern Europe, sociology remained a perpetual source of ideological quarrels from the beginning of the 1960s up to the mid-1980s. Even if party and state authorities often recognized the usefulness of sociology for their purposes, especially in periods when economic and social reforms were on the agenda, the sociological approach to the study of society never ceased to be regarded as a challenge to Marxist-Leninist ideology. The critical potential of sociology lay precisely in the fact that concrete and empirically grounded research devoted to the social facts of labor conditions, housing, lifestyle, healthcare, education, poverty, etc. tended to reveal the less familiar and gloomy side of the building of socialism. At the same time, sociology could also challenge communist ideology on its own level, namely by calling into question the social model which had been officially proposed under the label of “advanced socialist society”. By adopting sociological perspectives in their critical work on social conditions, social scientists started to discover and examine networks of relationships among social forms, stratifications, and developments which until then had gone largely unnoticed, as well as hierarchical relations of particular social strata existing and acting within the conditions prevailing under socialism. In doing so, they not only sought to rearticulate, if not explicitly to call into question, the Marxist conception of class system, but also to reconsider the Marxist-Leninist economic and social principles of the socialist model in the name of new strategies of social modernization. Thus, by the end of the 1960s, progressive Marxist sociologists in several Warsaw Pact countries, supported by reform-communist circles, tended to envisage themselves as the genuine mediators in the regime-society relationship. By taking as their starting point the empirical analysis of the given social reality, they were advocating a critical reappraisal of the ideological principles of the sate socialist regime itself.1

With this context in mind, I aim in this paper to provide an analysis of some of the decisive aspects of the development of Hungarian sociology from the early 1960 to the mid-1970s. In particular, I focus on three central figures: András Hegedüs (1922–99); István Kemény (1925–2008); and Iván Szelényi (1939). Their otherwise somewhat disparate intellectual trajectories from committed and professional sociological work to the adoption of a deeply critical attitude towards various elements of sate socialist social development and politics played fundamental roles in the subsequent formation of the profile of the cultural and political opposition, both within and beyond the social sciences in Hungary.2 I offer a comparative study of the work and careers of these scholars, whose critical attitudes towards the regime were acknowledge by the mid-1970s at a minimum with their dismissal from their academic jobs. What makes this subject worth studying is also the fact that, unlike other groups of scholars who played decisive roles in the newly forming democratic opposition in Hungary (for instance members of the “Lukács school” in the 1960–70s3 or the so-called “reformist economists” of the 1980s4), the sociologists in question never in fact formed a group. Rather, they had different backgrounds, different academic affiliations, and often contradicting views on the role and design of sociological research. Yet there were also striking similarities in their intellectual development, especially as far as their political confrontation with the regime is concerned. A comparative study of their careers and contributions, thus, offers a perspective from which to examine (1) the modes by which professional, institutional, and political aspects of academic work could play formative roles in the development of a social critical approach to state socialism; (2) the ways in which genuine scholarly achievements could influence the birth of oppositional attitudes and social dissidence; (3) the forms of comportment among party authorities, with regards to which the limits of political tolerance and the effectiveness of reprisals were always dependent on a certain ideological flexibility adapted to academic situations and on a network of formal and informal institutional and personal relations.

From Reformism to Revisionism: The Case of András Hegedüs

In the interviews he gave in the 1980s, András Hegedüs often described his political and scientific attitude in the period following his return from Moscow in 1958 as entirely “apologetic.”5 To be sure, after being prime minister in the last eighteen months of the Hungarian Stalinist regime marked by the dictatorship of Mátyás Rákosi, Hegedüs hardly seemed like someone who would have this attitude. In fact, as he reaffirmed in his memoirs, he was apologetic not only toward the socialist system that came in the wake of the events of 1956 in Hungary, but also toward the new political line represented by the Kádár regime itself. This apologetic attitude was certainly facilitated by the fact that, unlike most of the Rákosi regime’s political leaders, Hegedüs was neither expelled from the communist Party nor subjected to any disciplinary proceedings. There are reasons to believe that Kádár and his inner circle considered Hegedüs a possible ally in the fight against the revisionist tendencies within the Party, represented by the remaining followers of Imre Nagy. In 1961, Hegedüs was offered the position of Vice-President at the Central Statistical Office. It would be difficult to interpret this transfer as anything other than a reward for his loyal attitude toward the new regime. As a matter of fact, this attitude found clear expression in his post 1956 publications.6 Nevertheless, instead of taking the position, Hegedüs expressed his desire to devote himself to full-time scientific work and, more specifically, to sociology. His request received the full support of some prominent party members, including György Péter, the head of the Statistical Office, and Hegedüs was given the mandate to organize and lead the Sociological Research Group to be set up under the auspices of the Hungarian Academy of Sciences beginning in March 1963.

In the secondary literature based on the memoirs of many others in the field, Hegedüs’ name is inseparable from the rehabilitation and re-institutionalization of sociology in Hungary.7 In fact, the Sociological Research Group of the Academy was the first, and for quite some time the only, independent institute in socialist Hungary in which advanced research in the field of sociology could be carried out. Even more importantly, Hegedüs himself appeared to have been convinced at this point that sociology ought to be part of an “enlightenment process” the impact of which should spill over the barriers of even Marxist philosophy and ideology.8 Thus, by late 1963, Hegedüs’ intellectual position appeared fairly secure, and it seemed as if, over time, it would solidify even further. He was invited by the party leadership to take over the position as editor-in-chief of the political-cultural monthly Valóság [Reality], which, in line with an earlier decision of the Hungarian Socialist Workers’ Party (HSWP) Politburo, was to be turned into a journal with a “comprehensive and scientific profile.”9 Due to his new function, Hegedüs also became a member of the “Theoretical Working Group” of the HSWP, which functioned alongside the Central Committee. This move seemed a sign of an increasing political trust in him.10

This tendency, however, did not last long. One year later, at the “Nationwide Ideological Conference” of the HSWP, the journal Valóság was condemned for its ostentatious attitude and lack of self-criticism.11 Also, an important document entitled “Some Current Ideological Tasks of the Hungarian Socialist Workers’ Party: Guidelines by the Central Committee,” which was approved by the Central Committee in March 1965, harshly criticized sociological research in Hungary for its “abstract reasoning” and its “uncritical borrowings from the dubious achievements of bourgeois sociology.”12 The Guidelines also condemned Valóság for its “erroneous views,” “incorrect, bourgeois attitude,” “oppositional tendencies,” and “decadent approach.”13 These acts earned Hegedüs the label of “revisionist” for the first time and eventually triggered his removal from his position at the journal in June 1965.

For a time, however, Hegedüs’ dismissal from Valóság brought about no drastic change in the course of his intellectual career. On the contrary, his critical behavior had in fact channeled him towards the reformist party circles within the HSWP leadership, whose importance happened to be on the rise due their role in preparing the new economic reforms to be launched in January 1968. In 1965, Hegedüs was invited to take part in the work of the “Preparatory Committee for the Reform,” run under the auspice of the Economic Board operating next to the Central Committee. Hegedüs was asked to organize and oversee one of the eleven workgroups designed to assist the Preparatory Committee. His group was tasked with investigating “interaction between economic and social relations.”14 In this period, with respect to his own scientific work, Hegedüs continued to both extend and sharpen his theoretical sociological research. On the one hand, he devoted himself to critical analyses of socialist society from a structural point of view.15 On the other, he pushed the limits of critical analysis to new levels concerning the place and role of sociology within the system of Marxist social sciences, as well as concerning sociology’s claim to tackle some of the most vital social problems related to the building of advanced socialist society in general, and in Hungary in particular.16

Without doubt, the emphasis on sociology’s task of providing scientific self-knowledge for socialist society sums up the credo of Hegedüs’ vision of Marxist sociology. But it is also clear that his radical reformist endorsement of the critical function Marxist sociology could play in socialist society is separated, if at all, by only a thin line from the promotion of truly “revisionist” ideas. After all, Hegedüs’ Marxism seemed ready to jettison the classic Marxist theses on social development the moment the sociological analysis of the concrete social realities proved them false. At this point, however, he also believed that his ideas had essentially been confirmed by recent political and social developments and especially by the new economic reforms under preparation in both Czechoslovakia and Hungary. In an essay published in 1967 in the Hungarian literature monthly Kortárs [Contemporary] entitled “Reality and Necessity: The ‘Self-Criticism’ of Socialist Society as a Reality and a Necessity,”17 he went so far as to assert the “historical necessity” of the emergence in socialist society of a new type of critical attitude designed to reshape the relationship between the party and society.

The fact that in August 1968 it was not sociologists, but Warsaw Pact troops who readjusted the regime-society relationship in Czechoslovakia ultimately triggered the escalation of Hegedüs’ situation within his party. On August 21, along with the Hungarian sociologists and philosophers protesting in Korčula, the Party members of the Sociological Research Group condemned the intervention and Hegedüs addressed a petition to the Central Committee on the issue. In its report to the Politburo on this case, the Scientific, Educational and Cultural Board of the Central Committee made it clear that the protest issued by Hegedüs and his comrades against the intervention in Czechoslovakia was in reality only the most recent chapter in a far-reaching story. The document noted that since 1966, the Agitprop Committee had brought up the issue of the “negative tendencies” manifested in “Hegedüs’ theoretically and ideologically dubious ideas” several times. In conclusion, and as a way to solve the situation, the report proposed the removal of Hegedüs from the leadership of the Sociological Research Group.18

After 1968, Hegedüs’ research activity in sociology underwent a reorientation. In a somewhat programmatic study entitled “For the Healthy Development of Marxist Sociology,” which Hegedüs wrote right after his removal from the Sociological Research Group and which was published in the Társadalmi Szemle [Social Review], the theoretical monthly of the HSWP,19 he urged the continuation and even intensification of sociological research on social structures and social stratification under socialism. Hegedüs nevertheless did not entirely abandon the idea of advocating a radical “reformist position” when it came to sociological issues related to socialist development. This ambition, for example, was clearly manifest in the studies he devoted in this period to the sociological analysis of the question of “bureaucracy” under socialist conditions.20 Also, his views on “social progress” under socialist circumstances soon came under ideological attack.21 To be sure, it was precisely with reference to these lines of research that the accusations of revisionism against Hegedüs could be relaunched, accusations which eventually would lead to his expulsion from the party and his exclusion from academic and cultural life in general.

After all, by the end of 1972, the Kádárist party leadership had come increasingly under pressure from both its own hardliners and Moscow, each of which were demanding a revision of the allegedly overly liberal economic policies of the party.22 Under these circumstances, Kádár was all too keen to demonstrate, to those inside and outside of his party, that the reform of the Hungarian economy and society was firmly under the control of the HSWP and that no deviation from the official Marxist-Leninist dogmas would be tolerated. As a result, there was a sudden change in the ideological climate and in the line that divided what could be tolerated as a legitimate Marxist “discussion” of the questions of existing socialism and what was to be rejected on the grounds of its assumed anti-Marxist content. Not surprisingly, the ideas defended by Hegedüs, along with those promoted by the members of the Lukácsian Budapest School, fell soon prey to this ideological fervor, which sought to cleanse Hungarian Marxism of its new leftist wildings.

In January 1973, speaking before the Nationwide Ideological Conference in Budapest, György Aczél, the Agitprop Secretary of the Central Committee, left no doubt about who was to blame for “denying the existing socialist practices.” He named Hegedüs among others, and he accused him of “calling into question the fundamental theses of Marxism.”23 As a consequence, during a debate held in March 1973 under the auspices of the Cultural Political Work Collective the severely “anti-Marxist platform” of several social scientists and philosophers, including Hegedüs, Mária Márkus, Mihály Vajda, Ágnes Heller, György Márkus, György Bencze, and János Kis, was unanimously condemned.24 On the basis of this report, the Central Committee of the HSWP prepared a proposal for the Politburo. The Politburo accepted the proposal and decided to publish a final resolution on the case.25 It also ordered the Hungarian Academy of Sciences to take several measures against the scholars in question. Hegedüs, Vajda, and Kis was expelled from the HSWP, and all the scholars involved were dismissed from their academic jobs on the grounds of their “incapability for scientific work.” (They were offered lowering-rank positions as scientists or research assistants.)

Since none of the social researchers in question accepted the new jobs offered by the Academy of Sciences, their academic carriers in socialist Hungary were definitively over. As far as Hegedüs was concerned, after having accepted various advisory positions in large communist companies and after having been quickly dismissed from them at the order of party authorities, he retired in 1976.26 His sporadic collaboration with the increasingly significant democratic opposition movements in Hungary during the 1970 and 1980s had often been hindered by his unbroken belief in the possibility of a pluralistic socialist society without the implementation of a pluralistic political party system. But his role as critical sociologist and his vision of the enlightened moderation of the society-regime relationship in communist Hungary were doomed to be relegated, at least until the end the socialist period, to the realm of academic folklore. In a volume published in English on Hungarian sociology in 1978 and edited by his successors at the Sociology Institute of the Academy of Sciences, the main text of the brief introductory study devoted to an assessment of recent sociological research in Hungary made not a single mention of his name.27

The Empirical and the Illusionary: The Critical Sociology of István Kemény

One could characterize the sociological career of István Kemény as that of a strong character who was recurrently compelled to do empirical analyses of delicate topics—social stratification, poverty, the conditions of working class, the behavior of economic leaders, the problems faced by the Roma populations—related to the first two decades of the socialist reality in Hungary under Kádár. The unusual nature of his career was determined by the very historical event that served as the alpha point for both his career and the regime itself, namely the 1956 revolution. Having originally been sentenced to four years in prison for allegedly having participated in a “seditious conspiracy” during the revolutionary events, Kemény was released from prison in 1959.28 Between 1960 and 1969, he worked as librarian at the National Széchenyi Library in Budapest. In 1963, he was asked to join as assistant a newly launched group research project conducted by the Central Statistical Office on the question of “social stratification” in Hungary. By accepting this invitation, Kemény succeeded in part in adopting sociology as his main profession and became involved in one of the most instructive and challenging empirical sociological research projects in Hungary at the time.29 Since it used the term “stratification” (“rétegződés”) as one of its keywords, the 1963 survey challenged the view according to which the tendency of socialist society to lose gradually its original class structure should necessarily be understood as an improvement towards social homogeneity. In fact, as the project demonstrated, the loosening of class constraints had led to a more differentiated and not less imperious system of social stratification.30

In 1969, Kemény was asked to join the Sociological Institute of the Hungarian Academy of Sciences as a full-time research fellow. This change of status meant that Kemény immediately became involved in several empirically based research projects initiated and run by different institutes. One of the most interesting among them was devoted to the so-called “low income population” in Hungary. This research was run in effect by a work group within the Central Statistical Office. According to Kemény’s memoirs, the interest in the study of “poverty” in socialist Hungary was already present in the 1963 national survey, but György Péter, the president of the office, firmly opposed this idea, since he believed that if the Office as state institute “started to study poverty, this would suggest that it [socialist Hungary] was a system in which poor people could be found.”31

Kemény’s participation in the survey and the attention he devoted to the living conditions of the “low income” population became the foundation for his reputation. It can be said that this was one of the groundbreaking research initiatives in which he proved himself as a sociologist working with statistical means, but willing to go beyond the simply descriptive level of survey data to analysis of what these findings reveal about the living conditions under state socialism. Kemény’s task of translating the statistical category of “low income” into terms of the people’s real living conditions, and especially the living conditions of blue-collar workers, revealed hitherto unnoticed—or rather denied—aspects of socialist reality. Even before this research project officially terminated in 1972, he had an opportunity to give a lecture in 1970 on the topic at one of the annual sessions of the Hungarian Academy of Sciences, in which he did not hesitate to talk about the phenomenon of “poverty” in socialist Hungary. In fact, he was in all likelihood the first social scientist to use this term openly in an academic speech in the post-1956 period in Hungary.

In his talk, Kemény claimed that it was misleading to draw a strict limit based on a minimum income per head in a household, as was proposed by the Central Statistical Office, in order to define a person or a family as belonging to the “low income” category. Instead, he argued that the descriptive use of the “low income” category should include consideration of concrete living and housing conditions, including family composition, cost of transportation, whether someone lived in or had a sublet, whether someone lived in an urban or rural setting, etc. According to Kemény, this would enable a more nuanced understanding of the poor as people “who were not able to live like others do.”32 With this definition in mind, Kemény was keen to demonstrate new social inequalities in the socialist reality in Hungary. According to him, poverty as a real condition affected the lifestyle, social habits, educational standards, and everyday practices of those concerned.33

Not surprisingly, Kemény’s talk at the Academy created instant havoc in the Party headquarters. Although initially both Népszabadság [People’s Liberty] and Társadalmi Szemle published positive overviews of Kemény’s talk (which, however, failed to mention the term “poverty” in their account), more drastic consequences soon followed.34 Kálmán Kulcsár, the head of the Sociological Institute at the time, was immediately ordered to dismiss Kemény from the Institute. Kulcsár did as he was told, but since Kemény had already been conducting another ongoing survey in the Institute concerning the Hungarian Roma populations, the Party headquarters was contacted again in order to determine what to do. Finally, the decision was made to allow Kemény to keep his job on a monthly basis, i.e. by “signing on the first day of each month a work contract which would last to the last day of the month” and repeating this until the survey was completed.35 Kemény finished his survey on the Roma in late 1972, after which his status at the Institute was terminated.

The aim of the 1971 survey on the Roma population was to offer a comprehensive view of the social situation of Roma in Hungary, including their “linguistic and ethnic composition, settlement types, regional distribution, housing conditions, family size, number of children and live births, education, the effects of industrialization in the 1950s and 1960s, employment, and income levels.”36 Nonetheless, the research carried out under Kemény’s leadership between 1970 and 1971 was new and unusual in several respects. Most importantly, in setting up the basic analytical categories of the project, Kemény refused to attribute particular importance to the ethnic character of the population under study. As he stated, “in our research we classified as Roma all people whom the surrounding non-Roma community considered Roma.”37 The enabled him and his team to sidestep the task of providing a scholarly (chimerical) definition of who was Roma and who was not, but perhaps more importantly, it allowed them to focus their efforts on what they considered the essential sociological aspects of the population under study. “The Roma question is fundamentally not an ethnic question, but a question of social strata,” the study concluded in the summary of its findings.38 This indicated that Kemény’s sociological approach to the Roma followed in the footsteps of his earlier survey on poverty in that he privileged questions of social stratification over questions of social segregation or ethnic identity. Also, Kemény was far from sharing the optimism of some of the communist leadership, who considered the rapid transformation of the working and living conditions of the Hungarian Roma population as an unqualified form of progress towards social assimilation. Although the 1971 survey confirmed the facts related to the drastic changes in employment and to some extent the amelioration of living conditions, in other areas (especially in housing and schooling practices) it noted severe drawbacks.

If the 1971 survey on the Roma population did not cause a political scandal, this was due primarily to its accuracy and the indisputably scientific nature of its methods, but also to the fact that the circumstances of the Roma communities were far from being in the forefront of academic or social debates in Hungary at the time. Nevertheless, the whole body of the research material was released only in 1977 as an internal bulletin published by the Sociological Institute of the Academy, and it had no table of contents and no ISBN number.

By the time the Roma survey had been completed at the end of 1972, Kemény’s monthly based contract at the Sociological Institute had expired and had not been extended. Meanwhile, the historian Miklós Laczkó, who at the Institute of History of the Academy of Sciences was given the task of preparing a research project on the Hungarian working class, contacted Kemény and asked him to do a survey on Hungarian workers.39 The Institute of History itself was asked by the Scientific Board of the Central Committee to carry out this research, and the director of the Institute, Zsigmond Pál Pach, was convinced by Laczkó to employ Kemény for this task. To be sure, this choice was not unfounded, since Kemény’s earlier research on the working class had even drawn some attention in broader public forums.40 But a closer look at this situation reveals very well the inherently contradictory and unstable processes through which, in an academic environment, communist functionaries sought to assess the party’s ideological expectations. In fact, the research initiated at the History Institute on members of the working class had already clearly indicated the changing ideological circumstances which, in the short run, had brought to a standstill the economic reforms and triggered the official political rehabilitation of the doctrine of the “leading role of the working class” in Hungary. Under these circumstances, Kemény, with his 1956 legacy and bad academic reputation, did not in principle have a chance to return. But precisely because ideological and scientific expectations were suddenly and inextricably mixed, informal ties gained increasing significance. Pach was undoubtedly a loyal party functionary, but he could be convinced to take the risk of reinterpreting the meaning of “ideologically sound” as a characterization of potential colleague in light of an alleged need of expertise. And in doing so, he was clearly ignoring the fact that Kemény had already been prohibited from carrying out academic research in another scientific Institute belonging to the same establishment.

The survey on the Hungarian workers began on September 1972 and was finished by the end of 1973. In part, Kemény used most of the descriptive categories developed in his earlier research on social stratification, the working class, poverty, and the Roma populations, applying these categories to workers.41 One of the most striking aspects of Kemény’s descriptive study on the working class was the strong emphasis on the forms of social cohesion, which correlating closely with workers’ morale. Workers showed significant shared commitment to common concerns, including mutual recognition of expertise, solidarity in struggles for better earning and working conditions, and a shared interest in technological improvement. However, in light of Kemény’s survey (which was based on interviews), these forms of cohesion were delineated as forms of common strategies of negotiation and tactics of circumvention directed against the various forms of administrative power represented by the management and directors of the factory or the party. In the preface to the French edition of his book on workers, Kemény described the general strategy followed by the Hungarian working class as one of “permanent resistance,” according to which they sought “to obey the instructions in appearance only.”42

In 1973 the Scientific, Educational and Cultural Board of the Central Committee organized a debate at Institute of History on Kemény’s manuscript. The text was harshly criticized by leading Hungarian historians, such as Iván Berend T. and György Ránki.43 This was followed by a series of events which adhered to a well-known political logic. First, Kemény’s manuscript on the Hungarian working class was rejected for publication. Then, in March 1974, the Institute of History was ordered to terminate his contract, and virtually at the same time Kemény was prohibited by the Party authorities from participating in any research or publication initiatives. In 1975, the National Educational Institute led by Iván Vitányi tried unsuccessfully to hire Kemény to take part in a research project.44 After this, Kemény attempted to engage in various research initiatives using his colleagues as cover, but in January 1977, he decided the situation was hopeless and resolved to leave Hungary for France.

Iván Szelényi and the “Immanent Critique” of Socialist Society

In a recent essay written on the development of Hungarian sociology in the 1960s, Iván Szelényi argued that between 1966 and 1968, Hungarian sociologists began to realize that empirical research in itself does not necessarily lead to value-free or apologetic results. Empirically grounded sociological investigations were increasingly perceived as having the potential to provide critical insights into the social determinants of socialist society.45 According to Szelényi, by the end of 1960s, there were two general but not mutually exclusive trends that provided the impetus and the intuitive backdrop to these critical approaches. On the one hand, there was an approach which aspired to offer an “ideological critique of socialist society.” This approach was influenced by György Lukács46 and his school, and it was championed by Hegedüs. It sought to contrast the reality of established social conditions in existing socialism with the Marxist ideals. A different approach, on the other hand, was advocated by more empirically-minded sociologists, such as Szelényi himself, who were carrying out a “critique of socialist ideology.” This approach focused on some of the internal inequalities and contradictions of socialist society, which reflected the regime’s ideological blind spots and therefore favored the elaboration of an “immanent” critique of socialist ideology and social reality.47

Szelényi’s account of this topic is worthy of consideration from a historical point of view in part because in some of his writings published in the early 1970s he had already made clear his position on the critical function of sociology. In fact, in the methodological part of his dissertation Settlement System and Social Structure, submitted in 1972 for the degree of “candidate of science” (kandidátus, the equivalent of a PhD degree), he outlined the principles of social criticism in sociology in terms very similar to those presented in his more recent writings. In his dissertation, Szelényi drew a sharp distinction between “social critique” and “critique of ideology,” and he argued that, unlike the former approach, which appeals to transcendent values in order to influence collective will and prompt action allegedly needed to build a better society, the latter seeks to analyze ideology critically as a social product serving actual interests.48

Szelényi joined the Sociological Research Group of the Academy in 1963 at the invitation of Hegedüs, first as a part-time research fellow and then, from 1967, as a full-time research fellow. His first work on housing conditions in one of the slum-areas in Budapest (coauthored with Ferenc Nemes) marked his entry into the field of sociology.49 In 1968, Hegedüs was forced, for political reasons, to resign from the leadership of the Sociology Group, and his position was taken over by Kálmán Kulcsár. At the time, Szelényi was tasked with the part-time supervision of the newly established “Sociological Laboratory” at the Social Science Institute, working under the Central Committee of the Party. A year later, he published his work (coauthored with György Konrád) on the sociological problems faced by the communities living in the new housing projects in Hungary,50 and shortly after this, he also took over the direction of the regional sociological department at the Institute of Sociology of the Academy of Sciences. Simultaneously, Szelényi also began a teaching career at the Karl Marx University of Economics in Budapest, and he similarly was given a teaching position in sociology at the Political Academy of the party.51 Thus, when Szelényi was appointed to serve as one of the editors-in-chief of the newly established sociological monthly Szociológia in 1972, his career seemed to be on a fast track to ultimate recognition. As a matter of fact, at that point in time he was undoubtedly one of the highest-ranking social scientists in Hungary who was not a member of the HSWP.

To be sure, Szelényi’s success was influenced by the fact that he kept his distance from sensitive political matters. For instance, unlike many of his prominent colleagues (including Hegedüs), he refused to denounce publicly or through official Party channels the Warsaw Pact invasion of Czechoslovakia in 1968, and he also remained reserved with regards to the Lukácsian-Marxist social critical attitude widespread in the Sociology Group. As he later remarked, not only did his empirical mindset save him, for the time being, from getting into political trouble, but he also managed to benefit, in his career, from the overall intellectual and political situation.52 Nevertheless, one should note that the topics he chose and the approaches he followed in his research allowed him to move in directions that were far from any simple value-free empirical position. In fact, in a study published in 1969 on the role of sociology, Szelényi argued that the empirical orientation in sociology had the genuine potential to foster normative interpretations in social policy or open up alternatives for social services.53 

In a way, in their 1969 book Az új lakótelepek szociológiai problémái [Sociological Problems of the New Housing Developments], Konrád and Szelényi had already gone beyond a mere descriptive account of the case under study. Without doubt, some of the concrete findings of their investigations were truly shocking.54 Most notably, statistical evidence showed that, quite contrary to what was expected, apartments in newly built housing developments in Budapest and other major cities appeared to be systematically allocated to people belonging to social groups with higher incomes, mostly to the educated middle and upper middle class. On the base of these findings, Szelényi and Konrád revealed the de-privileged status of low-income earners and the working class as such and concluded that “as a whole, the construction of new housing developments cannot be characterized as social or communal house-building” in Hungary.55 Furthermore, they called attention to the “exceptionally grave consequences” which these developments were about to create in a metropolitan environment in terms of “social segregation.”56

Between 1970 and 1973, Szelényi and Konrád extended and deepened their analysis of the Hungarian housing system. In 1972, Szelényi submitted a manuscript entitled “Settlement System and Social Structure: Sociological Elements for an Analysis of the Hungarian Housing System and Urban Structure” to obtain a PhD degree.57 The text provided a more radical assessment of the problems related to the housing issue in Hungary, and it also embedded these problems in a larger socio-historical and structural analytical framework. Sociological problems concerning housing were thus found to be representative of other major forms of socio-economic inequalities under socialism, and this called for further investigations. Also, one of the novelties of the new analyses was their emphasis on the evaluative and critical importance of sociological analyses addressing the urban housing and planning system. As Szelényi stated in the methodological part of his dissertation, an immanent “ideological-critical” approach defined as “sociology of planning” was necessary in order to reveal and assess the “social relations of interest” underlying the processes of socialist social planning.58

In 1972, Társadalmi Szemle published an article, which was strongly critical in tone and in content of a paper published by Szelényi and György Konrád a few months earlier on various sociological and historical aspects of Hungarian urban development.59 The vehemence of the article was hardly surprising if one takes into account the purpose and arguments of the paper it was targeting. In a nutshell, by labeling urban development in Hungary “retarded” or “lagging,” Konrád Szelényi managed to blame the socialist economic policy of the previous two decades for its neglect of proper urban infrastructural developments, criticize its insensitively administered social-policies, and point out some current “social conflicts” which had been consequences of these wrong-headed policies.60

In one of his late interviews, Szelényi characterized this ill-received writing as the best he had ever written with Konrád.61 Whatever the case may be, it is certain that in the beginning of the 1970s, with the rise of anti-reform sentiments and the new anti-reform ideological offensive in the making, the critical approaches and orientations advocated by the Konrád and Szelényi tended to fall short of meeting the new prerequisites set forth for a “legitimate” Marxist way of doing social scientific research. Apart from the growing pressure to reinstate a noticeably more orthodox Marxist ideological approach to both theoretical and empirical issues, political approval (and disapproval) began to play an important role in shaping sociological research topics and activities. Even the ambition to exert more straightforward political control over the sociological research apparatus appeared on the agenda, as demonstrated for instance by an Agitprop party document from 1973 which proposed subjecting sociological surveys to “central authorization” in order to prevent them from being used to draw “false” or “ideologically hostile” conclusions.62

In principle, given his leading positions at various research institutions and the fact that he had been elected to serve on the editorial committee of the newly established revue Szociológia, Szelényi seemed to have little to worry about. Yet, in a way, it was precisely his personal inclination towards professional solidarity and his belief in the pursuit of sociology as an independent critical science that would soon bring him close to the end of his prosperous career in Hungary.

In 1973, Szelényi was among the few intellectuals who protested against the denunciation and removal from their academic positions of some of the closest disciples of Lukács and sociologists like Hegedüs and Maria Márkus. The next political event in which Szelényi took an important part was the trial of Miklós Haraszti. Haraszti, at this time an ultra-leftist poet and writer, was arrested in May 1973 on charges of having distributed mimeographed copies of his work entitled “Darabbér” (“Piecework”), which had not been given approval for publication. In the trial, Szelényi agreed to testify that as a journal editor, he intended to publish parts of Haraszti’s text in the revue Szociológia because he considered it a valuable and realistic analysis of factory life and workers’ lives in Hungary.63 To be sure, this statement was not entirely true. Nevertheless, due to the appropriate strategy chosen by the defense and the solidarity campaign that surrounded the case, Haraszti, although found guilty on the charges brought against him, was sentenced to serve only eight months in prison, a sentence which was suspended on condition that Haraszti spend three years on probation. But the trial had other consequences as well. Because of his involvement is the case, Szelényi was removed from the positions he held at the Institute of Social Sciences and at Szociológia. He was also temporarily prohibited from publishing, but more importantly, his reputation as a critical but reliable non-party member academic was severely damaged.

Interestingly enough, by the time they got involved in the Haraszti trial, Konrád and Szelényi had already embarked down a path to challenge the regime in power directly. At Konrád’s initiative, they had started to compile a scholarly manuscript which Szelényi envisaged as their critical-sociological masterpiece. To be sure, they were well aware from the very beginning that the task was politically impossible, meaning that the text would never be published in Hungary. As Szelényi later remarked, they were consciously preparing themselves to “commit scholarly suicide.”64 Their manuscript was thus meant from the outset to be a samizdat in its format, which makes it one of the very first examples of this genre in socialist Hungary.65 Not surprisingly, the police, which had been keeping Konrád and Szelényi under constant surveillance since the Haraszti trial, was well informed about their activities and waited for the moment to confiscate the manuscript and arrest its authors. The two men were detained on October 22, 1973 on charges of incitement, and they remained in custody for seven days.

The major argument of Konrád and Szelényi’s samizdat book The Intellectuals on the Road to Class Power was that under Eastern European state socialism, the intelligentsia was in the process, for the first time in history, of forming a dominant class. With this context in mind, the authors sought to adopt a reflexive critical position, which, like in Szelényi’s earlier sociological works, aimed to provide an immanent “critique of ideology.”66 According to Konrád and Szelényi, the class dominance of intellectuals in state socialism manifested itself in their increasingly crucial position (and allegedly experts) as “planners” and “redistributors” within this system. In other words, they argued that a constant intellectual materialization of certain “teleological” knowledge about long-term public interests in socialist society, embodied in the intellectuals’ bureaucratic class position, not only played a functional role in sustaining the regime, but was a fundamental element without which the socialist mode of production itself would have lost its distinctive features.

Without a doubt, Konrád and Szelényi’s book was a clear attempt to call into question some of the most crucial ideological cornerstones of existing socialist regimes: the tenet of the leading role of the working class and the ideological benevolence of the party. As a matter of fact, this point was clearly stressed in a report submitted to the Politburo of the HSWP about the case.67 The document also informed its readers of the outcome of this “unlawful activity”: after seven days of detention, the two suspects acknowledged authorship of the manuscript, and the case was closed with a “prosecutor’s warning.” At the same time, as a result of the case, Szelényi immediately lost his remaining jobs at the Institute of Sociology and the University of Economics, and his career in sociology and in the academic life in general was definitely over. The only reasonable option for him was to accept the at offer made by the interior affairs authorities, which at the time was rather exceptional, to leave the country.68

Conclusion: From Professional Commitment to Oppositional Attitude

The most striking aspect in the careers of István Hegedüs, István Kemény, and Iván Szelényi is not simply that, even with their different intellectual and political backgrounds, fields of interest, and academic contributions, they were all sidelined by the mid-1970s for political reasons. Even more remarkable than this is the fact that their involvements in politically contentious situations were triggered by the adoption of a similar intellectual attitude. Nevertheless, the formation of their noticeably analogous way of perceiving and reacting to certain scholarly situations seems to imply more than mere discontent with certain ideological expectations in Hungarian academia. It stemmed rather from their engagement in a complex setting of professional, institutional, and disciplinary practices and relations that gradually shaped their personal experiences and scholarly strategies in a similar way.

From this point of view, the decisive impact of two institutions (the Central Statistical Office and the Sociology Research Group) on the development of the intellectual profile of Hegedüs, Kemény and Szelényi should be highlighted. Although the forms and lengths of their engagement in the work of these institutions varied greatly, similarities are also apparent. Contact with the pioneering sociological work carried out at the Statistical Office constituted an important milestone in the career of all three of them. It certainly made them appreciate the role of a specific institutional environment and a diverse academic body in the development of an effective and relatively free research agenda. Hegedüs seemed to have been fully aware of this when he was given the green light in 1963 to establish his Research Group at the Academy of Sciences, where he also hired Szelényi. At the same time, as Kemény has remarked, the Sociology Research Group represented a trend similar to that of the more empirically minded sociological cluster of the Statistical Office led by Zsuzsa Ferge insofar as both institutions “wanted something that was hitherto forbidden” in Hungarian sociology.69

It should be noted that this took place during the subsequent period (1968–72), when the multiplication of institutions and research opportunities allowed for an increasing flexibility in sociological research and teaching. This was illustrated for instance by the case of Szelényi, who divided his time between the Sociological Research Group and the Institute of Social Science of the Central Committee, while he also held various teaching positions. The emergence of this new situation within the sociological profession in the early 1970s was certainly fostered by the central administration’s growing interest in and demand for accurate social knowledge relevant to various policy and economic issues. For example, Kemény’s research on the Roma population and the working class and Szelényi and Konrád’s work on the housing conditions in Budapest and other cities clearly reflected this tendency. This conjuncture in sociology has led to the proliferation of research institutions and even the introduction of a certain division of labor between them, and it has also created a need to implement forms of professional training to ensure further reinforcement. At the same time, this new situation has also changed the ways in which institutions in the academic sphere are used by sociologists to adopt and pursue their research agenda. Kemény’s pursuit of various research projects in different institutions between 1969 and 1973 demonstrated significant flexibility in this regard. To be sure, the growth in the available resources (including financial resources) and the reliance on project-oriented institutional backing have created significantly more options for research, much as they have also enabled people working in the discipline to pursue their efforts with a greater degree of professional commitment and have made it easier to overlook built-in ideological safety mechanisms in research.

Apart from the institutional factors, the variety of topical interests and approaches in sociological research and the ways in which the image of Hungarian society was altered over the course of the 1960s in sociological debates have clearly shown a strong vivacity and an openness within the discipline. In this context, both the more social critical approach taken by Hegedüs and the empirically driven orientation developed by Kemény and later Szelényi shared the conviction that society was made up of critically important factors which have their own particular functions and modes of development. The focus on social stratification on the one hand and the mesmerizing effects of discovering and analyzing social inequality on the other also constituted a common element in their works. Thus, Hegedüs’ strong insistence on the function of sociology as the most direct scientific instrument in the pursuit of critical knowledge of society has not essentially contradicted the more empirically grounded approaches adopted by Kemény and Szelényi. The differences between their approaches were, rather, strategic, insofar as Hegedüs insisted on the fact that the importance of sociological research should lie in ushering academic discourse towards an explicitly social critical, if not political role—something which Kemény and Szelényi were less ready to embrace if it was propagated in the name of a normative, let alone Marxist perception of society. For them, the realistic tone of sociology implied in and of itself a sufficient stance in order to approach social reality in critical terms.

This strategic difference was also reflected in the different ways in which Hegedüs, Kemény, and Szelényi appealed to and used Marxism in their works. Although they all seemed to agree fundamentally that orthodox Marxist-Leninist categories were totally inadequate for a sociological analysis of social structures and development, they nevertheless manifested different rationales in their precepts on which their rejections were based. In the case of Hegedüs, his adherence to the idea of socialism remained unbroken throughout his career. It was precisely this idea that fueled his criticism both of the Stalinist vision of society and the more technocratic agenda of building socialism. For him, redefining socialist reality in terms of domination, subordination, alienation etc., and thus challenging the received doctrines of Marxism-Leninism, was a necessary consequence of the perception of sociology as the ongoing critical examination of the course of socialist construction in which the drive towards “optimal” economic and social development should be counterweighted by a particularly strong focus on processes of “humanization.”70 Thus, for Hegedüs the constructive use of Marxism in the search for a “leftist” normative view of society remained a cornerstone of his sociological approach. Kemény’s manifest rebuff of Marxism followed a different path. In his case, it was more the result of a pragmatic rejection expressed in neutrality towards, neglect of, and cavalier disregard for Marxist categories. However, this sociologically orchestrated disinterestedness was grounded in the very methodology he employed in most of his research. The combination of social-statistical quantification with deep interviewing offered empirical findings and a foundation for social categorization which were substantial proof of the purely apologetic nature and scientific inadequacy of official Marxism-Leninism. In Szelényi’s case, the motivations for overlooking Marxism were different in nature. His stance was based on a predominantly theoretical rejection, manifested in a strategy of almost complete neglect of Marxist terminology in his earlier writings, which has accompanied an increasingly subtle search for empirical confirmation. In other words, for Szelényi, the inadequacy of the Marxist approach has relied primarily on its incapacity to address and frame phenomena of social structure, stratification, mobility, inequality, etc. in the study of which other Western sociological theories (for example the Weberian or Polányian approaches) have proven more conclusive. Nevertheless, it was precisely the fact that his rejection was theoretical in its design, and not purely political or empirical, that allowed him to return in a certain way to Marxist categorizations in his The Intellectuals on the Road Class Power.

Nevertheless, it would certainly be misleading to characterize the series of events that led to the exclusion of the three sociologists in question from Hungarian academic life by the mid-1970s as a cumulative process which could not have gone another direction and ended in a different scenario. Although there are always underlying reasons for ideological climate changes (and in this case, they usually accurately reflected the actual orientations and power struggles in which policy was rooted, especially in the academic sphere), ideology as such was far from a coherent and all-powerful system of norms providing direct support for the eventual implementation of administrative measures. Ideological intervention had to be channeled through institutions and forums of scholarly communication within which formal and informal relationships, political pedigree, and personal stamina often played roles as important as the role of the attitudes of the party’s cultural or agitprop bodies. But this also means that the escalation of an academic affair usually was fueled by a certain stubbornness or hard-minded attitude on the part of those who were targeted by the party authorities for political reasons. This kind of stubbornness certainly played a vital role in the case of Hegedüs, Kemény, and Szelényi. Yet their work was hardly intended initially as an immediate challenge to ideological or political barriers. Their dogged determination stemmed rather from their professional commitment to the value of sociological research, which, due to the more and more unsound and ambiguous standards of scholarly performance introduced for ideological reasons, gradually morphed into the adoption of a stance which could rightly be called oppositional, although in each case with a different connotation.

The fact that the revitalization of sociological research and the launch of empirical investigations were closely connected to economic reform drives from the mid-1960s had some serious consequences for the fate of sociology as a discipline in Hungary. First of all, as was made explicit by the case of Hegedüs, the invasion of Czechoslovakia by the Warsaw Pact countries in 1968 and the subsequent halt of the reforms were perceived by many as a defeat and as a consequent shrinking of scholarly opportunities. Yet what really counted was not necessarily the political face-value of these events. It was, rather, the lack of a positive model under these circumstances for valuable and pioneering sociological research which affected negatively the academic performance and vision of progressive sociologists. Whereas the Guidelines on Scientific Policy issued by the Central Committee of the party in 1969 accorded unlimited liberty to research in social science, it also called for “prudence and responsibility” (i.e. self-censorship) in making scientific results available to the public.71 But the nature of empirical findings in sociological research and the flexible and institutionally different understanding of scientific responsibility rapidly revealed the ideological frailty of these claims. Especially in sociology, in which scientific truth is supposedly founded on the critical observation of social facts, any demand for self-control and self-limitation could produce utterly counterproductive if not false results. Combined with the conviction that politics can discover in sociology something which it cannot discover by any other means, sociological responsibility in principle overtly fostered the emergence of a critical attitude.

Thus, one can understand why Hegedüs, even after his many conflict-ridden entanglements with the political world in Hungary, kept stubbornly challenging the prevailing view on socialist development in Hungary, arguing that the return to market conditions was in fact a false turn, because it intensified social stratification and inequality. The adoption of a political stance in this case was clearly motivated by sociological insight into society and its amalgamation and a belief in the idea of a genuinely socialist democratization of human relations. Similarly, Kemény’s uncompromising excavation of delicate social facts was linked to his belief in the unconditional value of the empirical study of social reality, even if it had regularly culminated in sociological analyses touching critically on some basic ideological tenets. Finally, Szelényi’s increasingly radical approach to sociology as a critique of ideology originated in and was founded on his perception of the discrepancy between certain empirically detected social tendencies which fostered inequality and a particular set of socio-politically promoted interests in society which supported them. In each of these cases, the only legitimate option offered by the academic establishment for sociological work consisted of keeping a low profile from the perspective of critical attitude and promoting the very social status quo the shortcomings of which had been revealed by sociological means. No wonder that for each of the three scholars irritation and disappointment with this situation, which was also for them a sociologically reflected disposition, called for a radical response: the emergence of an oppositional attitude both in their scholarly work and in the ways in which they were more and more ready to take serious political risks.

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Kemény, István. Velük nevelkedett a gép: Magyar munkások a hetvenes évek elején [The machines grew with us: Hungarian workers at the beginning of the 1970s]. Budapest: Vita, 1990.

Kemény, István. “Poverty in Hungary.” Social Science Information 18 (1979): 247–67.

Kemény, István, and László Gábor, eds. XXX: 1963-ban alakult meg a Szociológiai Kutatócsoport [XXX: In 1963 the Sociological Research Group was founded]. Budapest: Akaprint, 1994.

Kemény, István, and Béla Janky. “The Roma Population in Hungary 1971–2003.” In Roma of Hungary, edited by István Kemény, 70–225. Boulder: Atlantic Research and Publication Inc, 2005.

Kemény, István. “Interview on his career conducted by Vera Szabari.” Sociological Review, 18, no. 2 (2008): 135–54.

Konrád, György, and Iván Szelényi. Az új lakótelepek szociológiai problémái [Sociological problems of new urban settlements]. Budapest: Akadémiai Kiadó, 1969.

Konrád, György, and Iván Szelényi. “A késleltetett városfejlődés társadalmi konfliktusai” [The social conflicts of delayed urban development]. Valóság 15, no. 12 (1971): 19–35.

Konrád, György, and Ivan Szelényi. The Intellectuals on the Road to Class Power, translated by Andrew Arato and Richard E. Allen. New York–London: Harcourt Brace Jovanovich, 1979.

Mód, Aladárné, et al. Társadalmi rétegződés Magyarországon [Social stratification in Hungary]. Budapest: Central Statistical Office, 1966.

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Nyers, Rezső. “Emlékeim Hegedüs András pályafutásának három korszakáról” [Memories on the three Stages of the career of András Hegedüs]. In Búcsú Hegedüs Andrástól 1922–1999 [Farewell to András Hegedüs, 1922–1999], edited by Tamás Rozgonyi and Zoltán Zsille, 259–62. Budapest: Osiris, 2001.

Szántó, Miklós. A magyar szociológia újjászervezése a hatvanas években [The reorganization of Hungarian sociology in the 1960s]. Budapest: Akadémiai Kiadó, 1998.

Szelényi, Iván. “Empíria és szociológia” [The empiric and sociology]. Valóság 12, no. 11 (1969): 14–26.

Szelényi, Iván. Urban Inequalities under State Socialism. Oxford: Oxford University Press, 1983.

Szelényi, Iván. Városi társadalmi egyenlőtlenségek [Urban social inequalities]. Budapest: Akadémiai Kiadó, 1990.

Szelényi, Iván. “Utószó: Jegyzetek egy szellemi önéletrajzhoz” [Afterword for an intellectual self-portrait]. In idem. Új osztály, állam, politika [New class, new state, new politics]. Budapest: Európa Kiadó, 1990.

Szelényi, Iván. “Nosztalgikus jegyzetek a hatvanas évekről” [Nostalgic notes on the 1960s]. Mozgó Világ 41, no. 4 (2015): 80–97.

Szelényi, Iván. “Egy kézirat története” [The story of a manuscript]. Kritika 45, no. 7–8. (2015): 4–10.

Tőkés, Rudolf L. Hungary’s Negotiated Revolution: Economic Reform, Social Change and Political Succession. Cambridge: Cambridge University Press, 1996.

1 On these questions, see the essays in the volume edited by Keen and Mucha, Eastern Europe in Transformation, as well as the autobiographical collection of essays written by sociologists living in Central and Eastern Europe in this period, Keen and Mucha, Autobiographies of Transformation.

2 On the role played by Hegedüs, Kemény, and Szelényi in the formation of the Hungarian democratic opposition, see Csizmadia, A magyar demokratikus ellenzék, 25–29, 72–77, 145–48.

3 Cf. ibid., 19–25, 29–33.

4 Cf. ibid., 169–70.

5 Cf. Hegedüs, Élet egy eszme árnyékában, 329; “Beszélgetés Hegedüs Andrással,” 13, 25.

6 Idem, A munkásbérezés rendszere iparunkban; idem, A modern polgári szociológia és a társadalmi valóság; idem, Műszaki fejlesztés a szocializmusban.

7 Cf. Kemény and László, eds. XXX. 1963-ban alakult meg a Szociológiai Kutatócsoport; Szántó, A magyar szociológia újjászervezése a hatvanas években, 174–82, 199–211.

8 Hegedüs, “A marxista szociológia tárgyáról és helyéről a társadalomtudományok rendszerében.”

9 MNL OL M-KS 288-5. 304. ö.e., 24.

10 Szántó, A magyar szociológia újjászervezése a hatvanas években, 166.

11 Cf. MNL OL M-KS 288-5. 345 ö.e., 42.

12 “A Magyar Szocialista Munkáspárt néhány időszerű ideológiai feladata. A Központi Bizottság irányelvei,” 151.

13 Ibid., 161.

14 Nyers, “Emlékeim Hegedüs András pályafutásának három korszakáról,” 262.

15 Hegedüs, A szocialista társadalom struktúrájáról.

16 Idem, A szociológiáról.

17 Hegedüs, “Realitás és szükségszerűség,” 1011–19.

18 MNL OL M-KS 288-5. 476. ö.e., 131.

19 Hegedüs, “A marxista szociológia egészséges fejlődéséért!,” 93–99.

20 The collection of these studies was published in a book that has never been published in Hungarian: Hegedüs, Socialism and Bureaucracy.

21 Hegedüs, “A társadalmi fejlődés alternatíváiról,” 843–54.

22 On this issue, see Tőkés, Hungary’s Negotiated Revolution, 102–04.

23 Aczél, “Az ideológiai és kulturális élet néhány időszerű kérdése,” 200–01.

24 “Az MSZMP Központi Bizottsága mellett működő Kultúrpolitikai Munkaközösség állásfoglalása néhány társadalomkutató anti-marxista nézeteiről,” 37.

25 It is worth mentioning that János Kádár reserved for himself the right to make the final adjustments to both documents, MNL OL M-KS 288-5. 610. ö.e., 81.

26 Hegedüs, Élet egy eszme árnyékában, 366–67.

27 Cf. Huszár et al, Hungarian Society and Marxist Sociology in the Nineteen-Seventies, 5–15.

28 “Interview with István Kemény on his Career,” 138.

29 Mód et al, Társadalmi rétegződés Magyarországon.

30 Cf. Kemény, “Restratification of the Working Class,” 26–37.

31 “Interview with István Kemény on his Career,” 147.

32 Kemény, “A szegénységről,” 80.

33 Cf. idem, “Poverty in Hungary,” 247–67.

34 Cf. Népszabadság, November 15, 1970; Herceg: “A szocialista elosztás néhány kérdése,” 69.

35 “Interview with István Kemény on his Career,” 148.

36 Kemény and Janky, “The Roma Population in Hungary 1971–2003,” 70.

37 Kemény, ed., Beszámoló a magyarországi cigányok helyzetével foglalkozó 1971-ben végzett kutatásról, 9.

38 Ibid., 14.

39 “Interview with István Kemény on his Career,” 148.

40 Cf. Kemény, “Az úton lévők hatalmas tábora,” Népszava, October 17, 1969.

41 Cf. idem, Velük nevelkedett a gép.

42 Idem, Ouvriers hongrois, 16.

43 “Interview with István Kemény on his Career,” 151.

44 Csizmadia, A magyar demokratikus ellenzék, 171.

45 Szelényi, “Nosztalgikus jegyzetek a hatvanas évekről,” 13.

46 György Lukács also went by the names Georg Lukács and George Lukács over the course of his career.

47 Ibid., 14.

48 Szelényi, Városi társadalmi egyenlőtlenségek, 29.

49 Nemes and Szelényi, Lakóhely és közösség.

50 Konrád and Szelényi, Az új lakótelepek szociológiai problémái.

51 Szelényi, “Nosztalgikus jegyzetek a hatvanas évekről,” 16.

52 Idem, “Utószó. Jegyzetek egy szellemi önéletrajzhoz.” 443.

53 Idem, “Empíria és szociológia,” 14–26.

54 Cf. idem, Urban Inequalities under State Socialism, 6.

55 Konrád and Szelényi, Az új lakótelepek szociológiai problémái, 138.

56 Ibid., 146–47.

57 Cf. Szelényi, Városi társadalmi egyenlőtlenségek, 16–141.

58 Ibid., 29–31.

59 Apró, “Mi késleltette a magyar városfejlődést?,” 28.

60 Konrád and Szelényi, “A késleltetett városfejlődés társadalmi konfliktusai,” 19–35.

61 “Beszélgetés Szelényi Ivánnal,” 179.

62 MNL OL M-KS 288-41. 161 ö.e. 2.

63 Szelényi, “Egy kézirat története,” 6.

64 Konrád and Szelényi, The Intellectuals on the Road to Class Power, xvii.

65 Csizmadia, A magyar demokratikus ellenzék, 73.

66 Konrád and Szelényi, The Intellectuals on the Road to Class Power, 251.

67 MNL OL M-KS 288-5. 650 ö.e. 163–64.

68 Konrád and Szelényi, The Intellectuals on the Road to Class Power, xviii.

69 “Interview with István Kemény on his career,” 147.

70 Cf. Hegedüs, “Optimalizálás és humanizálás,” 17–32.

71 Cf. Az MSZMP Központi Bizottságának Tudománypolitikai Irányelvei, 37–67.

Volume 6 Issue 4 CONTENTS

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Introduction

Zsombor Bódy and András Keszei

The present issue is the outcome of a conference held at the Péter Pázmány Catholic University on October 21, 2015. The title of the conference was “Boundaries of Contemporary History.” It was organized by the Research Group for Social History of the Faculty of Humanities and Social Sciences of the Péter Pázmány Catholic University in Budapest with the aim of bringing together historians interested in questions of theory and method in the study of contemporary history. The complex problem of the present, considered as a specific perspective for historical writing, constitutes a considerable challenge for historians all over Europe. The dangers inherent in the public use of history require a resolute strategy on the part of academic history in defense of its roles. Has the maintenance of some control or at least influence over the excessive and uncritical use of different kinds of memory, which has been one of the consequences of the overwhelming rule of the present over contemporary societies, become one of academic history’s main functions, especially given the increasingly palpable need of contemporary societies for various and at times conflicting forms of nostalgia? Or has history itself, as has been claimed by several influential authors, become a form of memory? The inquiry into the boundaries of contemporary history concerns both the specific scientific conceptual framework of the writing of the history of the present and the limits of a period of time in human history formed by social and political factors which are constitutive elements of our present and which cannot be historicized yet as forces of a bygone era (in other words, a period of which we have living memories, not only historical accounts). The studies in this issue examine the peculiarities of this period and the institutional, conceptual framework of a professional history which is compelled to maintain a balance between social demands for memory (and identity) and its own methodological criteria. They also explore questions concerning the status of contemporary history among other branches of historiography and other present-centered social sciences. They seek to further a deeper understanding of the work and roles of historians as members of the community of professional scholars and as citizens who are attempting to orient themselves and their audiences in the maze of the present with the potential help of history.

The organization of the conference and the publication of the edited versions of the papers which were presented was made possible in part through the financial support of the Faculty of Humanities and Social Sciences of the Pázmány Péter Catholic University (“KAP-15 119-1.9-BTK”-grant).

 

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Introduction

Hungarian Historical Review Volume 9 Issue 3 (2020): 385-389 DOI: 10.38145/2020.3.385

Andrea Pető, Alexandra M. Szabó, and András Szécsényi

There was a significant debate in the Hungarian journal of social sciences and culture Kommentár in 2008 initiated by Gábor Gyáni as to whether Hungarian Holocaust research had or had not been successfully integrated into international discourse after 1989.1 One element missing from the debate was that after 1989, main concepts and the language of the discipline derived from the Western side of the (fallen) Iron Curtain. The histories of the Holocaust survivors had been only descriptive in nature, while the experiences of Jewish communities, the members of which had lived under communism was of predominant focus. There was no theoretical inquiry in Holocaust scholarship as long as the objective fact-finding was taking place, expanding on questions as to when, where, and what had happened to which actors. Historical inquiry, however, needs to extend further to explain the uncovered events and experiences.

For instance, a significant element missing from the scholarship in its entirety is gender analysis, and this observation brings to the fore the lack of discussion on methodology and the consequent absence of acknowledging developments. Hungarian scholarship of Holocaust historical inquiry with a central aim evolving around gender analytical perspectives is still nonexistent, yet there are some contributions about women and the Holocaust in the English language, for instance by Andrea Pető.2 This special edition of the Hungarian Historical Review lines up studies which draw on new modes of analyses and frameworks with the aim of achieving knowledge production on a whole new level about the Holocaust in Hungary.

The lack of innovative theoretical frameworks and other new approaches in understandings of the history of the Shoah in the Hungarian context explains the current poor state of institutionalized Hungarian Holocaust research. The consequences are not only prevalent in academia, but also in the public sphere (which influences science policy) and in shifts in public memory of the Holocaust in Hungary.

However, the current struggles for memory are far from a memory policy based on democratic consensus and development. Since illiberal states do not have an ideology but only a memory policy, the weak domestic institutionalization of Hungarian Holocaust research with low international recognition has contributed to the successful reinterpretation of the Holocaust remembrance paradigm by illiberal actors. Scholarly attempts against this were and are still being made, such as the relevant scholarly volume published on the occasion of what is referred to as the 70th anniversary of the Holocaust in Hungary, which was published in Hungarian and English by CEU Press3 (a year of anniversary that is misleading as it suggests that the Holocaust in Hungary began with the German occupation in 1944 instead of with the labor service system and with the earlier deportations of Hungarian Jews, such as the deportation of Jews to Kamianets-Podilskyi in 1941, where an estimated 23,000 Jewish deportees were massacred in two days). At the same time, historical research workshops operating in Hungary mostly outside the system that ensures scientific standards and outside the international scientific frameworks are growing, and they are pursuing ad hoc research in parallel with the existing research infrastructure in support of the present government’s politics of memory.

Demonstrating the lack of new research directions in Hungary that are prevalent in international Holocaust scholarship, Andrea Pető called for the organization of a conference entitled The Hungarian Holocaust: Victimhood and Memory, together with Gábor Gyáni, Edit Jeges, and András Szécsényi and in cooperation with Central European University and the Humanities Research Center of the Hungarian Academy of Sciences in Budapest on December 18, 2017. A selected number of presentations were considered for publication in Századok, the most prestigious Hungarian historical journal, for its special section dealing with the Hungarian Holocaust. The selection of conference speakers and publications mirrored the work of mostly young researchers who, despite the dwindling research infrastructure, had carried out methodologically innovative work based on archival research. The introduction to this section in Századok was censored for discussing “illiberal memory politics,” although the authors took a clear stand against this suppressive act.4 The presentation of this special issue, which took place on September 25, 2019, was met with unprecedented interest at Central European University, indicating that the Holocaust continues to be a subject of major scholarly and public interest.

Despite the controversial nature of memory politics and the lack of proper infrastructure, a new generation of researchers worked on this special issue to present new approaches and findings, thus taking an important step towards international exchange by elevating Hungarian Holocaust research onto the international stage and bringing innovative research methods from the international pool into Hungarian scholarship.

The articles in the present volume contribute to historical understandings which primarily work from the perspectives of the victims of the Holocaust. Based on the division of historical inquiry by Raul Hilberg, the Hungarian historiography of the Holocaust focuses on one of categories suggested by Hilberg: perpetrators, victims, or bystanders. This mainstream allocation, however, has been widely criticized in recent decades by many researchers worldwide, and they have offered new approaches which shift the focus to the behaviors, interactions, and dynamics among societies and communities involved in the Shoah, together with closer study of the psychological and sociological perceptions of these groups. This paradigm shift has emerged only recently in Hungarian scholarship, another significant reason as to why Hungarian historiography has only rarely constituted a serious part of the international discourse.

In recent decades, there have mostly been descriptive, fact-finding monographs published that are based on archival sources and avoid the use of private or narrative sources.5 A group of Hungarian Holocaust researchers who mainly belong to the new generation would like to break from this approach and widen the perspective of inquiry. The papers in this issue seek answers to questions concerning how Jews, who were deprived of their basic rights, forced to serve in labor service, and then, in 1944, compelled to live in ghettos and yellow star houses or deported to concentration camps, lived and survived under these extreme conditions. The histories presented here also consider how the survivors remembered their pasts in the immediate postwar setting with a specific focus on the modes in which these experiences were later recounted.

The approaches and viewpoints presented by our authors are of a wider scale. Some papers belong to the field of microhistory, while others closely examine and reflect on specific oral historical sources and narratives. The interpretations largely rest on contemporary and postwar narrative sources (memoirs, diaries, and other notes), in addition to the archival documents, which touch primarily on questions pertinent to individual life stories.

István Pál Ádám examines the case of the butchers of Budapest and considers how the governmental and municipal administration of the late Horthy-era impacted the leftists and the Jewish butchers from the issuance of the 1939 anti-Jewish law. Ádám examines the ways in which the butchers of the capital were forced to change their strategy in the postwar democratic society of Hungary. Tamás Csapody examines diaries, some of them incomplete, written by six inmates of the camps in and around Bor. They were Hungarian citizens of Jewish and other free church denominations who had been deported from Hungary in 1943 and 1944 and taken to the lager-system of Bor (Serbia), later to be brought back to Hungary in the second half of 1944 and then (some of them) taken to German concentration camps. He provides insightful content analysis and examines diaries written by six inmates, one of which is being presented for the first time in this volume. Heléna Huhák analyzes the spatial experiences of some of the inmates who were deported from Hungary to Bergen-Belsen in 1944–1945. She draws on diaries, memoirs, and correspondence in order to explore perceptions of space formed in the memories of camp inmates. Edit Jeges examines survivor accounts by Polish and Hungarian Jewish women and reflects on the nature of her primary sources. She also considers the further potentials of digital storytelling as a source and the importance of survivor memory at a time when fewer and fewer survivors remain among us. Borbála Klacsmann summarizes the roles and the activities of the Government Commission for Abandoned Property regarding the restitution of Hungarian Jews in the first three years of the postwar period, providing specific examples from Pest County through personal accounts and correspondence. Alexandra M. Szabó examines Jewish women’s experiences of miscarriages before, during, and after the Shoah through a specific case study in order to draw attention to the significance of such corporeal events from a social historical point of view. Her study considers the implications of the silence concerning women’s experiences in Holocaust research to show that gender analysis substantially adds to further knowledge production. In his case study, which partly overlaps with Huhák’s paper, András Szécsényi also concentrates on one space, a German DP camp. Szécsényi tries to reconstruct the spatial experiences of György Bognár, a former inmate of Bergen-Belsen who was taken to the Hillersleben DP camp after liberation. The paper explores space perceptions based on Bognár’s diary and the maps he drew, which Szécsényi compares with his own in-person experiences of the sites (or what remains of them). Ferenc Laczó’s paper presents German historiography from recent decades on the Hungarian Holocaust by exploring the relevant findings and conclusions of the most important German histories. Through his findings, he seeks answers to questions concerning why there has been so little institutionalized cooperation between the German and Hungarian research communities.

We would like to dedicate our work to the memory of Randolph L. Braham (1922–2018), who, as the pioneer in Hungarian Holocaust research, was a true inspiration and supportive friend of the scholars whose works are part of the present volume.

1 The articles of this debate can be found in Kommentár, no. 3, 5, 6 of 2008.

2 Women and the Holocaust: New Perspectives and Challenges, edited by Andrea Pető, Louise Hecht, and Karolina Krasuska (Warsaw: IBL PAN, 2015).

3 The Holocaust in Hungary Seventy Years Later, edited by András Kovács and Randolph L. Braham (Budapest: CEU Press, 2016).

4 Andrea Pető, “Áldozatok, emlékezet, jóvátétel a magyarországi holokausztkutatás új irányai,” Századok, no. 4 (2019): 639–40.

5 Gábor Gyáni, “Hungarian Memory of the Holocaust in Hungary,” The Holocaust in Hungary: Seventy Years Later, edited by András Kovács and Randolph L. Braham (Budapest: Central European University Press, 2016), 215–30.

pdfVolume 4 Issue 4 CONTENTS

Petr Popelka

Business Strategies and Adaptation Mechanisms in Family Businesses during the Era of the Industrial Revolution The Example of the Klein Family from Moravia

 

Family businesses are a central topic in the history of business, especially in the early phases of the industrialization process. This case study attempts to identify the business strategies and the adaptation mechanisms used by a family business during the era of the Industrial Revolution. The main aim of the study is to explore which adaptation mechanisms and strategies were used during the Industrial Revolution by large family firms in the Lands of the Bohemian Crown. The study focuses on a model example, the Klein family, which ranked among the foremost entrepreneurial families in the Bohemian Crown Lands. The Kleins initially rose to prominence through their road construction business. They later built private and state railways and also diversified into heavy industry. I delineate the main stages in the development of the family firm, discuss a number of key microeconomic factors which influenced the Kleins’ business activities, and describe the factors which ultimately led to the downfall of this once-successful firm.

Keywords: business history, family firm, Industrial Revolution, capitalism, Lands of the Bohemian Crown, business strategies, adaptation mechanisms, Gebrüder Klein, Klein von Wiesenberg

The Problem of Continuity and Adaptation

In his influential study of the family, businesses and capitalism, Jürgen Kocka states that the spirit and practice of capitalism are based on non-capitalist structures and processes which have a long-term influence over capitalism. He identifies the family as one of the key elements which contributed to the formation of capitalism. Kocka writes that family structures, processes and resources encouraged the emergence of industrial capitalism and helped resolve certain problems faced by capitalist industrialization. In his view, this role was particularly evident in the early phase of industrialization.1

Many years have elapsed since the publication of Kocka’s above-cited article, and many studies have explored the relationships between business and the family. Although scholars may differ in some of their conclusions regarding this relationship, there nevertheless exists a general consensus that the family played an exceptional role in business throughout the nineteenth century.2 In the European historiography on business history, over the course of the past decade there was a marked increase in the interest in the history of family businesses; many studies of family businesses focus on the nineteenth century, the era which witnessed the formation of modern family business practices. Many phenomena have been analyzed with regard to nineteenth-century family businesses; among the most important are issues of succession within family firms, business strategies applied by family businesses, and the construction of social networks.3

The central topic of this study (and indeed this entire issue of the journal) concerns enterprises in adaptation. This topic is intricately intertwined with the question of continuity in business, a question that has not yet been fully addressed by Czech historiography with regard to nineteenth-century businesses. Existing studies suggest that the development of the entrepreneurial classes in the Bohemian Crown Lands was in fact characterized not by continuity, but rather by discontinuity. This finding has been demonstrated by historical research mainly in terms of the transition between business practices in the proto-industrial era and the industrial era. Businesses which emerged under the protectionist conditions that prevailed during the period of enlightened absolutism and the Napoleonic Wars generally found it difficult to adapt to the conditions of economic liberalism that characterized the early phase of industrialization. There were, moreover, certain specific features which affected developments in individual sectors. In some sectors, the technological changes brought by the Industrial Revolution necessitated such hugely increased volumes of investment that it was practically impossible to manage a smooth transition from traditional manufacturing methods to modern mechanized production; many established businesses failed to deal with this challenge. The thesis of the discontinuity between proto-industrial and industrial business practices has been confirmed by Czech historiographical research focusing on the mining and metallurgical industries, and to some extent also by research into textile production.4 Family firms involved in glassmaking or textile production based on the factor system achieved a higher level of continuity between the proto-industrial and industrial eras; in both these sectors there were some family businesses which spanned several generations. However, even in these industries not all entrepreneurs proved able to adapt to the new circumstances.5

The issue of continuity in the entrepreneurial classes of the Bohemian Crown Lands during the era of industrialization has been addressed in Czech historiography by a small number of studies that focus on specific groups of entrepreneurs who were active in particular sectors (M. Myška on metallurgy, J. Matějček on mining, J. Janák and B. Smutný on textile production, J. Janák and F. Dudek on sugar refining). These studies all reveal the dynamic changes experienced by the entrepreneurial classes during the course of the Industrial Revolution.6

Research on family businesses may well offer insights into the issue of business continuity during the era of industrialization; this remained the most widespread form of enterprise throughout the nineteenth century. Modern research has shown that, by their very nature, family businesses display a strong tendency towards continuity; this is reflected in the existence of family firms spanning three (or more) generations during the era of industrialization. Among the more recent studies describing this phenomenon is an article by Michael Schäfer that explores the situation in Saxony.7 However, Czech historiography unfortunately still lacks an equivalent study drawing on broad-based collective biographical research and focusing specifically on family businesses, in spite of the fact that a number of new business encyclopedias offer an excellent information resource.8 Case studies nevertheless confirm that family firms represented a significant source of business continuity during the era of industrialization in the Bohemian Crown Lands. On the other hand, these studies also suggest that only a few of these family firms managed to maintain their continuity for more than three generations. In most cases, the firms suffered either as a result of a failure to handle generational transitions successfully or as a consequence of external circumstances; this was particularly typical in the turbulent first half of the twentieth century.9

This article examines the business strategies and adaptation mechanisms adopted by family firms in the Lands of the Bohemian Crown during the era of the Industrial Revolution.10 I focus on a model example, the Klein family, which ranked among the foremost entrepreneurial dynasties in the Habsburg Monarchy.11 In his Sozialgeschichte Österreichs, Ernst Bruckmüller describes the Kleins as an Austrian example of the possibility of a quasi-American form of social advancement.12 This description alludes to the fact that the Kleins represented one of the few examples of self-made men in Central Europe during the Industrial Revolution. Within the span of a single generation they managed to work their way up from relatively humble origins to the pinnacle of the entrepreneurial elite.13 The present study examines the development of the Kleins’ family business with a particular focus on how they responded to the challenges posed by the changing business environment.

The Early Years of the Klein Family Business

Although the early history of many companies is frequently associated with some form of “founding fathers myth,” depicting the first generation of the company’s owners in a heroic light and serving a purpose of legitimization, the beginnings of the Klein family firm were not auspicious.14 The father of the founding generation, Johann Friedrich Klein (1756–1835), attempted to implement numerous business plans, but mostly without success. In addition to his main business as a cloth trader, he also attempted to acquire an inn, which was a traditional source of income. The family’s bleak prospects after the state bankruptcy in 1811 led Johann Friedrich’s sons to leave home at an early age.15 The first to leave, in 1812, was the eldest son Josef Engelbert (1792–1830), followed soon afterwards by the second eldest son Engelbert (1797–1830). Both worked as laborers on water management projects at the Moravian estate of Eisgrub (today Lednice, Czech Republic), where they gained their first experiences in the construction trade. In 1816, along with their younger brother Franz (1800–1855), they capitalized on their skills, winning their first contract to rebuild a short stretch of road. The contract was relatively minor, but it nevertheless gave the brothers their first experience in road construction. This was soon followed up by a number of other small-scale contracts for road rebuilding, river regulation, minor building work in towns, and similar jobs.16

In 1826, Josef Engelbert Klein won the largest contract of his life, and this launched the Kleins’ long involvement in building the main road network throughout Moravia and Silesia. The family’s first major transport infrastructure project was the construction of a state road in the western part of Austrian Silesia, a contract which generated tens of thousands of gulden in profits. The project was huge in its scale, so it required not only experience in road construction, but also organizational acumen and a good deal of physical strength. Josef Engelbert therefore decided, as he had in the course of previous projects, to involve his younger brothers, including the adolescent Libor Klein (1803–1848). The brothers invested the profits back into their business, but the project brought them much more than just capital; above all, they acquired essential know-how regarding the organization of labor on large-scale road construction projects. They assembled a team of skilled workers and laborers, and they acquired the necessary tools, horses and carts. They also learned how to negotiate with the state authorities, and they gradually built up a network of influential social contacts.17 This gave them a comparative advantage over competing bidders for similar public contracts. Helped by their policy of offering generous discounts and their growing reputation as reliable operators, the Kleins managed to participate in the majority of important road construction products in Moravia and Silesia during the 1830s and 1840s.18

The Kleins’ experience in road construction in the first half of the nineteenth century was an important factor that helped them win contracts in an area that proved to be much more lucrative, namely railway construction. The family firm was involved in a number of projects connected with the first steam railway built in the Habsburg Monarchy, the Emperor Ferdinand Northern Railway (Kaiser Ferdinands-Nordbahn). The projects involved earthworks and the construction of both brick and timber structures. The Kleins had many years’ experience in this kind of job thanks to their road construction contracts. However, nobody in Austria had any experience in rail-laying, so this work was initially carried out by experts from abroad. From 1837 to 1856, the Kleins built around 340 km of railways for the Kaiser Ferdinands-Nordbahn, plus a number of station buildings and guard-houses.19

When the Austrian state decided to invest its own funds in the construction of a network of major rail routes, it was able to choose from a number of established contractors. In addition to the Klein brothers, other key firms operating in this sector included companies owned by the Bohemian entrepreneur Adalbert Lanna, the Italian businessman Felice Tallachini, and the Moravian Fleischmann brothers.20 However, this small circle of firms gradually lost its monopoly in the 1840s. The railway construction sector became highly competitive, and some of the later state contracts were divided up among several companies. Despite the fierce competition that developed in the sector, the Kleins managed to retain a highly influential position in the following decades – helped not only by their know-how, but also by their skill at forming consortiums with other major building contractors, especially Adalbert Lanna, Johann Schebek, and Karl Schwarz. The smaller contractors found it very difficult to compete with these strong, established firms, and the Klein brothers continued to be involved in numerous major railway projects throughout the Habsburg Monarchy from the late 1830s to the mid-1870s. In this period, the Kleins participated in the construction of over 3,500 km of railways throughout the Habsburg Monarchy.21

The Kleins’ early entrepreneurial activities bear most of the hallmarks of the business strategies that were widespread during the early phase of industrialization. During this era, businesses’ strategies were rooted in close cooperation among family members, who provided a mutual support network and thus helped mitigate the initial risks associated with business ventures. The family also played a key role in the transfer of business know-how; the knowledge and skills that were put to use in many sectors were acquired empirically. Another important role of the family was in financing; the individual members of the family offered mutual financial support, and capital was generally loaned within the family or borrowed from individual creditors. Bank loans were taken out only if very large investments were necessary.22 Close cooperation among the brothers enabled the Kleins to win building contracts and successfully implement large projects which would have been beyond the capabilities of individuals acting alone.

The Investment Strategies of the First Generation of Kleins

During the early phases of industrialization, certain sectors were characterized by a marked lack of equality in business opportunities. This was not only an issue of starting capital; in the period leading up to 1848, business in the Austrian Empire was still heavily influenced by the existence of feudal structures. Well into the first half of the nineteenth century, ownership of a large aristocratic estate represented an important competitive advantage in many sectors of business. Among the most significant advantages were priority access to raw material resources (e.g. iron ore and coal); a monopoly on the ownership of forests, which were the primary source of fuel; the right to use water resources; and the ownership of large tracts of land. Ownership of raw materials meant that estate owners were not dependent on the fluctuating prices of these commodities. Estate owners could also exercise their rights vis-à-vis their subjects; in the first half of the nineteenth century, subjects were still required to perform compulsory labor duties (Fronarbeit) or carry out forced labor for inadequate wages.23 Estate owners also had easier access to credit, as the estate could be pledged as collateral on loans.

At the end of the eighteenth century and during the first half of the nineteenth, many capital-rich merchants, financiers and other businessmen in the Bohemian Crown Lands invested part of their profits in the purchase of estates.24 In the case of entrepreneurs during the early phases of industrialization, this did not necessarily represent a form of feudalization.25 For some entrepreneurs the acquisition of estates not only represented a safe way of investing their capital for the benefit of future generations; it was also a means of supporting their business activities. This motivation is clearly evident in several case studies of entrepreneurs in the first half of the nineteenth century,26 and the Kleins were no exception. Thanks to their successful road construction and (especially) railway construction business, the family was able to accumulate a huge quantity of capital in a relatively short period of time; by the 1840s, the Kleins had amassed many hundreds of thousands of gulden. This not only enabled the family members to embrace a new lifestyle, it also opened the door to new business plans.27

The Kleins’ investment strategy in the 1840s and 1850s was unusual when compared with the strategies adopted by other entrepreneurs, not only in its extent, but also in the family’s attempts to diversify into numerous different areas of activity. By hiring capable managers, the Kleins were able to expand their activities into sectors in which bourgeois families had not traditionally played a major role, yet which were of crucial importance in the burgeoning Industrial Revolution.

Inspired by their success in the highly lucrative railway construction sector, the Kleins decided to become involved in one of the most complex and capital-intensive industries of all: metallurgy. The decision to invest in metallurgical production forced entrepreneurs to implement adaptive changes in both the organization and financing of their businesses. The Kleins’ railway projects had put them in contact with some of the leading industrial managers of the era, employed in the services of both the state and private companies. These included the renowned expert on mining and metallurgy Franz Laurenz Riepl.28 In the 1830s, Riepl was appointed manager of the ironworks owned by the Austrian Chancellor Anton Friedrich Mittrowsky at the estate in Wiesenberg (today Loučná nad Desnou, Czech Republic). In 1844, with Riepl’s encouragement, the Kleins purchased the Wiesenberg estate (where they had been born as subjects) and, with the assistance of Riepl as the works manager, began to modernize the local ironworks in order to produce rails and other material for railway construction. By the middle of the century, the Kleins had modernized the local engineering works so effectively that they were capable of producing all types of machines with the exception of locomotives. The family hired a number of leading experts, and the ironworks and engineering works on the Wiesenberg estate ranked among the most important factories of their kind in the Bohemian Crown Lands for two decades.29

The Kleins’ involvement in metallurgical production in the 1840s and 1850s was exceptionally successful. In addition to building up a production base on their own estate, they also established new ironworks in Stefanau (today Štěpánov, near Olomouc, Czech Republic), in the close vicinity of the Kaiser Ferdinands-Nordbahn. The family made a huge investment in the Kladnoer Eisengewerkschaft at Kladno near Prague; together with Adalbert Lanna they established a modern ironworks which ultimately grew to become one of the largest such facilities in the Bohemian Crown Lands.30 In the mid-1840s, inspired by their close collaborator Franz Riepl, they expanded their activities into Hungary’s Temes County (today Timiş County, Romania), co-founding the Zsidowaer Eisenwerk Gewerkschaft (later the Nadrager Eisen-Industrie Gesellschaft). They satisfied momentary demand for metallurgical products by leasing and operating ironworks, particularly near Würbenthal in the western part of Austrian Silesia (today Železná, near Vrbno pod Pradědem, Czech Republic).31 The Kleins’ ironworks remained highly profitable for the family up until the economic crisis of the 1870s, ranking alongside their construction business as their primary source of income.

The Kleins’ activities in the iron industry led them to invest in another important sector, namely coal mining. Their attempts to acquire mines in the Ostrava-Karviná coalfield in order to supply coal for their Moravian ironworks ultimately proved unsuccessful, weakening the family’s position in the Moravian iron industry.32 This failure was caused not by inept strategy, but rather by the serious financial problems which the family faced as a result of the bankruptcy of the Viennese merchant Demetrius Zinner in 1855, to whom they had lent a large quantity of their liquid funds.33 The Kleins enjoyed greater success in the Kladno coalfield, where, in a joint venture with other bourgeois businessmen, they established the largest metallurgical conglomerate in Bohemia, including ironworks, coal mines and iron ore mines. The family also maintained a long-term presence in several mining companies operating in the Rossitz-Oslawan (today Rosice-Oslavany, Czech Republic) coalfield and the South Moravian lignite field; most of the coal was supplied to the family’s own businesses. From the 1840s onwards, the Kleins also began to establish new business ventures in other economic sectors, establishing modern mills, sugar refineries and textile factories on their own estate.

Another important facet of the family’s business activities was the purchase of various types of real estate, a practice they adopted even in the early years. The strategy of investing part of their available funds in real estate may have been related to their mental patterns of behavior, which were shaped by their experience of the state bankruptcy of 1811. The real estate thus acquired functioned not only as a store of value and a means of displaying the family’s wealth; it was also frequently used as collateral for loans taken out to finance the family’s new business ventures or to fund the family business directly. One important group of properties owned by the family consisted of the apartment blocks and building plots purchased in Vienna in the early 1870s, when the Gebrüder Klein empire was at its peak.34

Organizational Changes in the Family Business as an Adaptation Strategy

Organizational changes were essential for the successful development of family business. These changes can be traced on two levels: firstly in terms of the changing legal forms of the business and secondly in terms of the professionalization of management, as companies began to appoint managers from outside the family.

The Kleins’ business activities expanded rapidly during the 1840s, to the point where it was no longer possible for senior management positions in the family’s companies to be occupied solely by family members. This soon led to the type of transformation that has been described by Alfred D. Chandler: personal enterprise, in which the owner holds the leading position in the company, gave way to entrepreneurial enterprise, in which the owner takes the strategic decisions but delegates control over the company’s day-to-day operations to hired managers.35

This shift occurred most rapidly in the sectors in which the family members lacked the necessary experience and which required specialized knowledge in order to succeed. In such cases the Kleins recruited some of the most capable managers available. In addition to Franz Laurenz Riepl, these managers also included Alois Scholz and later Friedrich Klein in the iron industry and Anton Péch in the mining industry.36 Even in their construction business, which formed the basis of the family empire, the Kleins found it necessary to hire capable managers with technical qualifications. The shift from road construction to railway construction required the assembly of a stable team of technical and administrative employees, especially engineers and construction assistants. The Kleins recruited mainly talented graduates of technical colleges who already had some experience working in the construction industry, offering them considerable freedom in decision-making and ensuring their loyalty by paying better salaries than they would have earned in public-sector jobs. Many of these recruits became capable businessmen in their own right, who continued to collaborate with the Kleins even after they had left the company and set up their own firms. They included Johann Schebek (1815–1889), Karl Schwarz (1817–1898), the Theuer brothers, Osvald Životský (1832–1920) and Jan Muzika (1832–1882).37 Given the diversity of the Kleins’ business activities, they implemented the same policy of appointing experienced managers in most of their other companies, including the family estate and other large estates acquired at a later date.

Although the transition to professional management took place during the 1840s and 1850s, family members remained personally involved in supervising the business until the 1870s. This was the case both with the longest-lived member of the founding generation, Albert Klein (1807–1877), and with his nephew, Franz II Klein (1825–1882). The last construction project to be directly managed by a member of the family was the Buštěhrad railway near Kladno (1854–1855). Later, Albert and Franz II devoted their attentions solely to the high-level management of the family business, particularly issues of business strategy and financing. From the mid-1850s, construction contracts were generally undertaken in collaboration with other companies, with Gebrüder Klein responsible for the financial side of the project and providing the technical and administrative staff.

It is remarkable how long the Klein family business continued to exist in the form of a consortium (a loose association of individual family members rather than a distinct legal entity in its own right). The rules governing the family business were formally established in a family contract concluded in 1847; this contract codified the existing system of mutual relationships among the brothers involved in the business. This came at a time when the founding generation had already managed to diversify the family’s range of business interests significantly. The contract stipulated that the oldest adult male member of the family was to be the head of the family business and act as its authorized legal representative.38 He was to exercise overall control not only of the family’s jointly purchased estates, but also all their jointly conducted business activities, including the family ironworks. He was authorized to use jointly held funds in order to raise yields on the family estate and increase production at the ironworks. However, the head of the family business could be voted out of this post, and the position was not hereditary. If the head of the business died or was voted out, the new head was to become the next oldest adult male family member, i.e. the next eldest brother. The 1847 family contract effectively codified the practices that already existed within the family business, and it did not change the manner in which the business was conducted; this remained, as before, based on voluntary cooperation within a family consortium.

It was not until 1853 that the family firm was formally established. This can undoubtedly be viewed as an adaptation strategy, as the family was forced to take this step by external circumstances. A contract established the company “Gebrüder Klein,” whose field of activity was defined as all types of construction work. Throughout its existence, the company had the form of a general partnership, with the family members holding the position of partners.39 In the contract, the brothers undertook to run the business as a single entity, sharing both costs and profits; profits were to be distributed proportionately on the basis of the sums invested by each partner. The partners were liable to the full extent of their assets. However, the partners were not permitted to transfer to the company any liabilities in connection with their own private business activities. The head of the company was to be the eldest of the brothers. On the basis of this contract, the company was registered in Brünn (Brno), Vienna and Prague. Until 1878, the registered head office was in Brünn; in 1878 it was then relocated to Vienna.

Although Gebrüder Klein was a mere general partnership and never became a joint-stock company, until the second half of the 1870s it ranked among the largest and most capital-rich construction companies in the Habsburg Monarchy. It functioned as an umbrella organization for all the family’s business activities, not only its construction business, but also its activities in other sectors (the timber trade, coal mining, and the Viennese apartment blocks). This broad range of activities was reflected in the company’s financial profile. When established, it already had assets running into millions of gulden, and by 1870 its total assets exceeded 10 million. Gebrüder Klein’s strong capital base proved particularly essential to the development of the company’s core business, railway construction.40

However, not all of the family’s business activities were conducted via Gebrüder Klein. Leaving aside the numerous private business ventures of individual family members, unrelated to the family business as a whole, another important arm of the family business also remained separate from the company from the very outset: the ironworks in Zöptau (today Sobotín, Czech Republic) and Stefanau (today Štěpánov, Czech Republic). When these ironworks were at their peak (i.e. up until the early 1870s), they were the second highest producer of iron in Moravia (after the Vítkovice Ironworks) and the third largest producer of rails in the entire Habsburg Monarchy.41 In 1865, the ironworks (along with the family’s North Moravian iron ore mines) were reorganized in order to cope with rising production; they were removed from the control of the family estate to become the Zöptauer und Stefanauer Bergbau- und Eisenhütten Gewerkschaft. The family members remained the exclusive owners of stakes in the business, though they had no direct involvement in the day-to-day management; the ironworks, engineering works and iron ore mines were all entrusted to professional managers.

This organizational change in the family business laid the foundations for its further development. However, the firm soon had to contend with two major issues: a deep economic crisis and a generational transition.

The Loss of the Ability to Adapt: the Crisis of the 1870s and Its Impact

The second half of the 1860s can be characterized as the peak of the Industrial Revolution in the Bohemian Crown Lands; this was a period of rapid economic growth. The economic boom enjoyed by the Habsburg Monarchy in 1867–1873 (the so called Gründerzeit) was a hugely important time in the state’s development. It was accompanied by political consolidation, an increase in economic productivity, a banking boom, the formation of many joint-stock companies, and the rapid development of transport and communications infrastructure. The sectors of heavy industry that were involved in railway construction (namely mining, metallurgy, and mechanical engineering) enjoyed particular prosperity. Railway construction was the primary motor of the economy during this period.42

However, 1873 brought a turning point, which ultimately had an impact on all areas of the economy, but especially those areas that had prospered most during the preceding boom years. The railway fever which gripped the Habsburg Monarchy in the late 1860s and early 1870s came to a sudden halt in 1873. Although the railway companies soon felt the negative effects of the recession, existing railway construction projects continued under their own momentum until the 1870s. However, 1877 marked the end of this period; the railway construction projects that had already been underway when the recession began were now completed and entrepreneurs showed no interest in new projects of this type, which made significant demands on capital yet represented a high-risk proposition in the new economic climate.43 Construction companies, which had profited tremendously from the railway boom of the late 1860s and early 1870s, now faced an entirely different situation. In a very short time they were forced to adapt rapidly and deal with a slump in demand for transport-related projects, which had previously represented a major source of income. Most large construction firms experienced severe problems; in addition to Gebrüder Klein, other companies in the Bohemian Crown Lands which battled with an uncertain future included Adalbert Lanna, Karl Schwarz and Johann Schebek.

Throughout the boom years, Gebrüder Klein had benefited from its activities in key industrial sectors, but the company now faced a difficult situation. Until the mid-1870s the firm was still able to profit from its ongoing railway construction contracts. The last railway project in which the company is known to have been involved was the Salzkammergutbahn (1875–1877). The problem was that once the worst of the crisis was over, at the turn of the 1880s, Gebrüder Klein proved incapable of adapting to the new circumstances and reestablishing its former primacy as a railway builder. The company played no part at all in the construction of the new local railways. This inability to adapt appears to have been due to the generational transition within the company, which ushered in an entirely new situation at the turn of the 1880s.

During the economic crisis of the 1870s, large construction companies attempted to seek out new, alternative avenues for their business. The most promising areas included water management projects, infrastructure projects involving the modernization of urban areas, and trade. Adalbert Lanna’s company sought to compensate for the slump through its involvement in the river regulation projects on the Vltava and Labe (Elbe),44 while in 1878 Gebrüder Klein actually managed to win one of the largest contracts in the firm’s history, playing the leading role in a canal construction and land reclamation project in the northern Italian province of Ferrara. On completion of the work, Gebrüder Klein established an Italian subsidiary, L’Azienda Gallare, which operated the drainage system until the turn of the twentieth century. The second main area in which both the Kleins and Lanna invested during the recession was the timber trade. In the early 1870s, in connection with the building of the Erste Siebenbürger Eisenbahn, the Kleins became aware of huge areas of forested land in Arad County (formerly Hungary, now Romania). In 1873, Albert and Franz Klein (together with the Viennese entrepreneur Johann Sepper and Baron Peter Atzél de Borosjenő) established a timber company, and in 1879 they purchased several estates around the town of Borosjenő (today Ineu, Romania), where they remained involved in the logging trade until the mid-1880s.45

However, the Kleins’ business activities in the late 1870s and 1880s represented the swansong of this once-successful company. The family proved unable to replace the lost income from railway construction and the firm’s profits gradually dwindled. The company began to owe large sums to banks, and, unlike in previous years, it also issued numerous promissory notes to other businesses. Nevertheless, Gebrüder Klein’s decline was a gradual process. In the early 1880s, the company still owned assets totaling around 7 million gulden, primarily real estate (coal mines, large estates, Vienna properties), securities (mainly shares in rail companies), and money owed by various debtors.46

In addition to the recession, another major problem with which the company had to contend was the generational transition, the Achilles’ heel of family businesses.47 This transition came at the most inconvenient time. In 1877, Albert Klein died. The last living member of the founding generation, he had built up a network of excellent social connections and he possessed an undoubted business acumen. This loss was followed four years later by the death of Albert’s nephew and long-term collaborator Franz II Klein. Their sons had all the necessary qualities to take over the family business successfully: a university education, strong financial capital, and social prestige.48 However, they proved incapable of implementing the necessary innovations in the business and the company failed to adapt to the changing circumstances.49 This inability to adapt exacerbated two latent problems that were also present in many other family businesses besides Gebrüder Klein: the lack of new capital, and unresolved legal and property relations among the heirs.50

During the 1880s, the remaining family members withdrew from playing an active role in the business; this was reflected in the gradual decline of the various components of the firm’s assets. The Kleins even reduced their role in activities which were clearly prospering ventures. In 1887, for example, the family withdrew from the Viennese construction firm “Gebrüder Klein, A. Schmoll und E. Gaertner,” which had been established in 1869 as a joint venture combining the know-how of the Viennese structural engineers Adolph Schmoll and Ernst Gaertner with the capital provided by the Kleins. The company specialized in road and railway bridges, river and canal embankments, and quays and docks. The Kleins sold their stake in the firm at a time when it was still working on contracts to build railway bridges for the Hungarian Northern Railway.51

The inability of Gebrüder Klein to respond quickly to changing circumstances was also reflected in the company’s organizational structure. Especially in capital-intensive sectors, the recession led to a significant degree of economic concentration, which also brought changes in the legal forms preferred by businesses. Former family firms, which had often operated as general partnerships, began to restructure themselves into capital-based companies, usually joint-stock companies or limited partnerships, and later also limited liability companies. In some cases these companies continued to operate in the same way as the previous family firm, merely with a change of legal status. Nevertheless, Jürgen Kocka views this change of legal form as a significant step towards the loosening of the ties between business and the family.52 Gebrüder Klein remained a general partnership until the firm’s eventual liquidation, and the company’s iron production business changed its legal form only belatedly, at the turn of the twentieth century.

The Kleins’ traditional domain—iron production—was particularly severely affected by the economic crisis. The recession of the 1870s dealt the final blow to small or obsolescent ironworks which had failed to keep step with the ongoing development of modern production technologies. By the early 1870s, the Kleins’ stake in the highly viable Kladno ironworks (cofounded by the Kleins in the 1850s) had been bought out by the Credit Anstalt für Handel und Gewerbe. Not even the skilled manager Friedrich Klein was able to modernize the ironworks operated by the Zöptauer und Stefanauer Bergbau- und Eisenhütten Gewerkschaft. The rapid obsolescence of these ironworks, and their increasing failure to keep step with the competition, was exacerbated from the late 1870s by a combination of factors, chief among them the family members’ unwillingness to invest in modern technologies and a shortage of operating capital. In the 1880s, Friedrich Klein built coking ovens at both ironworks, despite the opposition of family members, who feared that the new coal-fired ovens would cause a slump in demand for the timber from their estates. However, this partial modernization merely postponed the rapid decline in the ironworks’ fortunes. The works were located at a considerable distance from coal deposits, and they suffered from high transport costs and poor-quality iron ore. This made the operation uncompetitive, though the company’s inevitable failure was staved off for several years by the introduction of a new product range. In 1901, the ironworks business was transformed into a joint-stock company (the Zöptauer und Stefanauer Bergbau- und Hütten- Aktiengesellschaft) with a basic capital of 3 million Krone (krona), but not even this step could save it. In 1910, pig iron production in Zöptau ceased, followed in 1913 by iron production at the Stefanau works. Both sites subsequently focused solely on processing iron produced elsewhere.53

By the turn of the twentieth century the Kleins’ once-famous firm was reduced to a mere shadow of its former self. It ceased to exist entirely at the end of 1908, when it was officially dissolved. In the run-up to World War I, the Kleins’ business activities focused solely on their hereditary estates and their holdings of shares in several joint-stock companies. By this point, the Kleins were no longer members of the Austro-Hungarian business elite.54

Conclusion

In the period following the Napoleonic Wars, the Bohemian Crown Lands witnessed the emergence of its first generation of modern entrepreneurs, who made a major contribution to the industrialization of the region. Some of these entrepreneurs came from prominent dynasties of merchants and bankers (e.g. the Rothschilds, Gutmanns, Herrings, Zdekauers and Lämmels), but others worked their way up from modest beginnings as small business owners (e.g. the Liebig, Lanna and Starck families). This case study, based on an analysis of the Klein family business, has demonstrated the exceptionally important role played by families in entrepreneurial activities during the era of the Industrial Revolution. These structures helped mitigate the initial risks associated with business ventures, and families also played a key role in the transfer of business know-how. In the road construction industry, in which the Kleins’ family firm first rose to prominence, close cooperation among family members enabled the family to win building contracts and successfully implement large projects which would have been beyond the capabilities of individuals acting alone.

Several business strategies were used by Gebrüder Klein during the course of its existence. The core business strategy during the Industrial Revolution involved the creation of social networks, which brought major benefits both socially and economically. These networks were not generally built up in a calculated way; far more frequently they simply emerged naturally in response to the company’s ongoing trajectory of development. One specific business strategy used by some entrepreneurs during the era of the “old regime” was the purchase of large estates. In the Kleins’ case, the family’s investment in such an estate was connected with their plans to become involved in the iron industry. However, even after the abolition of the patrimonial system, entrepreneurs continued to consider the purchase of large estates a good form of investment that represented a safe and tangible store of value and a symbol of social prestige.

Before the collapse of the “old regime” in Austria, the Kleins managed to implement effective business strategies, enabling them to respond to the changing economic circumstances in this late feudal state. Above all this involved a considerable degree of diversification in the family’s business activities. Even under the founding generation, the family portfolio included investments in all of the important sectors of the burgeoning Industrial Revolution. This business strategy was implemented with demonstrable success by a number of other leading bourgeois entrepreneurs in the Bohemian Crown Lands. The Kleins were also quick to invest in securities, initially in government bonds and later in company shares. Their share portfolio was highly diversified, including railway companies, textile factories, sugar refineries and insurers.55

A major adaptation strategy involved organizational changes. These changes can be traced on two levels: firstly in terms of the changing legal forms of the businesses and secondly in terms of the professionalization of management, as companies began to appoint managers from outside the family. The transition to professional management took place relatively quickly in the Kleins’ various family businesses during the 1840s and 1850s, though it was not until 1853 that the family firm itself (originally run as a loose consortium) was restructured as a general partnership, with the partners directly involved in company management. However, this change in legal form was somewhat inflexible, and it did not fully reflect the transition to a system of professional management. The family’s ironworks business first existed as a family firm; it was not restructured as a joint-stock company until the turn of the twentieth century, though this was not enough to save it.

The close connection between business and the family is demonstrated by the fate of the Kleins’ company during the crisis years of the 1870s. The construction company Gebrüder Klein was severely impacted by the recession, like other large family firms in the Industrial Revolution era, and although it began to implement a viable adaptation strategy, this process was interrupted by the death of key family members who had played a central role in guiding the company’s development during its rise to prosperity. Their heirs were unwilling to continue in business, and this led to a gradual decline in the firm’s activities, accompanied by a lack of interest in new developments and trends.

Archival Sources

Opava Provincial Archives (=OPA)

Olomouc branch, fonds “Rodinný archiv Kleinů” [Klein family archives], cart. 1, inv. no. 35.

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Smutný, Bohumír. Potštejnská manufaktura na česko-kladském pomezí. Studie o východočeském plátenictví v letech 1754–1761 [The Potštejn Manufacture in the Bohemian-Silesian Border Region. A Study of East Bohemian Cloth Manufacturing in 1754–1761]. Hradec Králové: Vysoká škola pedagogická, 2002.

Smutný, Bohumír. Hrabata pláteníky a pláteníci barony. Společenské a sociální skupiny v čele českého a moravského plátenictví ve 2. polovině 18. století” [Social Elite of the Bohemian and Moravian Linen Industry in the Second Half of the Eighteenth Century]. In Šlechtic podnikatelem – podnikatel šlechticem. Šlechta a podnikání v českých zemích v 18.–19. století [Noblemen as Entrepreneurs – Entrepreneurs as Noblemen. The Nobility and Entrepreneurship in the Bohemian Crown Lands during the Eighteenth and Nineteenth Centuries], edited by Jiří Brňovják and Aleš Zářický, 49–61. Ostrava: Ostravská univerzita, 2008.

Smutný, Bohumír. Brněnští podnikatelé a jejich podniky (1764–1948) [Brno Entrepreneurs and their Companies]. Brno: Statutární město Brno, 2012.

Spurný, František. “Příspěvek k dějinám sobotínských železáren v 50. – 70. letech 19. století. Biografie Aloise Scholze” [On the History of the Sobotín Ironworks in the 1850s–1870s]. Rozpravy Národního technického muzea 77 (1980): 81–90.

Spurný, František. “Friedrich Klein a poslední pokusy o záchranu severomoravského železářství” [Friedrich Klein and the Last Attempts at Rescuing a North Moravian Ironworks]. Rozpravy Národního technického muzea 82 (1981): 131–35.

Štaif, Jiří, ed. Moderní podnikatelské elity. Metody a perspektivy bádání [Modern Entrepreneurial Elites. Methods and Perspectives of Research]. Prague: Dokořán, 2007.

Štěpán, Václav. “Důlní podnikání bratří Kleinů v Ostravě a montanista Anton Péch (1822–1895)” [The Klein Brothers’ Coal Mining Business in Ostrava and the Mining expert Anton Péch]. Ostrava. Příspěvky k dějinám a současnosti Ostravy a Ostravska 18 (1997): 293–307.

von Saldern, Adelheid. Netzwerkökonomie im frühen 19. Jahrhundert. Das Beispiel der Schoeller-Häuser. Stuttgart: Franz Steiner Verlag, 2009.

Wehler, Hans Ulrich. Deutsche Gesellschaftsgeschichte III. Von der “Deutschen Doppelrevolution” bis zum Beginn des Ersten Weltkrieges 1849–1914. Munich: C.H. Beck, 1995.

Zářický, Aleš. “Moravskoostravští měšťanští podnikatelé na cestě od rodinných firem k nadnárodním společnostem. K problematice změn forem podnikání na konci 19. a na počátku 20. století” [Bourgeois Entrepreneurs in Moravian Ostrava on the Path from Family Firms to Multinational Companies. On Issues of Changes in Forms of Business in the Late Nineteenth and Early Twentieth Century]. In Královská a poddanská města od své geneze k protoindustrializaci a industrializaci [Royal and Subject Towns from Their Genesis to Proto-industrialization and Industrialization], edited by Jiří Jurok, 221–49. Ostrava–Nový Jičín–Příbor: Ostravská univerzita, 2002.

Zeumer, Sandra. Die Nachfolge in Familienunternehmen. Drei Fallbeispiele aus dem Bergischen Land im 19. und 20. Jahrhundert. Stuttgart: Franz Steiner Verlag, 2012.

 

Translated by Christopher Hopkinson

1 Jürgen Kocka, “Familie, Unternehmer und Kapitalismus. An Beispielen aus der früher deutschen Industrialisierung,” Zeitschrift für Unternehmensgeschichte 24 (1979): 99–135.

2 Andrea Colli, The History of Family Business 1850–2000 (Cambridge: Cambridge University Press, 2003); Toni Pierenkemper, Unternehmensgeschichte. Eine Einführung in ihre Methoden und Ergebnisse (Stuttgart: Franz Steiner Verlag, 2000), 112; Wieland Sachse, “Familienunternehmen in Wirtschaft und Gesellschaft bis zur Mitte des 20. Jahrhunderts. Ein historischer Überblick,” Zeitschrift für Unternehmensgeschichte 36 (1991): 9–25; Louis Bergeron, “Familienstruktur und Industrieunternehmen in Frankreich (18. bis 20. Jahrhundert),” in Familie zwischen Tradition und Moderne, ed. Neithard Bulst, Joseph Goy, and Jochen Hoock (Göttingen: Vandenhoeck & Ruprecht, 1981), 225–37.

3 One finds examples of these approaches in Sandra Zeumer, Die Nachfolge in Familienunternehmen. Drei Fallbeispiele aus dem Bergischen Land im 19. und 20. Jahrhundert (Stuttgart: Franz Steiner Verlag, 2012); Adelheid von Saldern, Netzwerkökonomie im frühen 19. Jahrhundert. Das Beispiel der Schoeller-Häuser (Stuttgart: Franz Steiner Verlag, 2009); Michael Schäfer, Familienunternehmen und Unternehmerfamilien. Zur Sozial- und Wirtschaftsgeschichte der sächsichen Unternehmer 1850–1940 (Munich: C.H. Beck Verlag, 2007); Harold James, Family Capitalism. Wendels, Haniels, Falcks and the Continental European Model (Cambridge–London: Belknap Press, 2006).

4 Arnošt Klíma, “The Beginning of the Machine Building Industry in the Czech Lands in the First Half of the Nineteenth Century,” The Journal of European Economic History 4 (1975): 49–78; Arnošt Klíma, “Industrial Growth and Entrepreneurship in the Early Stage of Industrialization in the Czech Lands,” The Journal of European Economic History 6 (1977): 549–74; Milan Myška, Rytíři průmyslové revoluce. Šest studií k dějinám podnikatelů v českých zemích (Ostrava: Ostravská univerzita, 1997), 30–49; Jiří Matějček, “Majetky, důchody a investiční možnosti v českých zemích v 19. století,” Studie k sociálním dějinám 19. století 6 (1996): 101–240; Jan Janák, Hospodářský rozmach Moravy 1750–1918 (Brno: Matice moravská, 1999), 9–28; Bohumír Smutný, Potštejnská manufaktura na česko-kladském pomezí. Studie o východočeském plátenictví v letech 1754–1761 (Hradec Králové: Vysoká škola pedagogická, 2002).

5 Bohumír Smutný,Formování podnikatelské buržoasie ve lnářském průmyslu v Podkrkonoší,” Lnářský průmysl 4 (1981): 95–116; Bohumír Smutný,Pokus o typologii lnářských podnikatelů na Trutnovsku (na příkladu podnikatelských rodin Klugů a Etrichů),” in Podnikatelstvo jako předmět historického výzkumu, ed. Milan Myška (Ostrava: Ostravská univerzita, 1994), 135–43; Bohumír Smutný,Hrabata pláteníky a pláteníci barony. Společenské a sociální skupiny v čele českého a moravského plátenictví ve 2. polovině 18. století,” in Šlechtic podnikatelem – podnikatel šlechticem. Šlechta a podnikání v českých zemích v 18.–19. století, ed. Jiří Brňovják and Aleš Zářický (Ostrava: Ostravská univerzita, 2008), 49–61; Milan Myška, “Slezská podnikatelská rodina Grohmannů. Pokus o kolektivní biogram dvou generací podnikatelské rodiny,” Slezský sborník 92 (1994): 176–94.

6 Jan Janák, “Počátky podnikatelské aktivity české buržoasie na Moravě (na příkladu cukrovarnictví),” Časopis Matice moravské 97 (1978): 291–332; František Dudek, Vývoj cukrovarnického průmyslu v českých zemích do roku 1872 (Prague: Academia, 1979); Milan Myška, “Das Unternehmertum im Eisenhüttenwesen in den böhmischen Ländern während der industriellen Revolution,” Zeitschrift für Unternehmensgeschichte 28 (1983): 98–119; Jiří Matějček, “Majitelé a podnikatelé v uhelném hornictví na území dnešního Československa v 19. století,” in K hospodářským a sociálním dějinám 19. a 20. století (Opava: Slezský ústav ČSAV, 1991), 5145; Jiří Matějček, “Poznámky k vývoji sociální skupiny průmyslových podnikatelů a vlastníků v českých zemích v 19. století,” Studie k sociálním dějinám 19. století 5 (1995): 83–168.

7 Michael Schäfer, Familienunternehmen und Unternehmerfamilien, 101–42.

8 Milan Myška et al., Encyklopedie podnikatelů Čech, Moravy a Slezska (Ostrava: Ostravská univerzita, 2003); Ibid., vol. 2 (Ostrava: Ostravská univerzita, 2008); Bohumír Smutný, Brněnští podnikatelé a jejich podniky (1764–1948) (Brno: Statutární město Brno, 2012).

9 Pivo, zbraně i tvarůžky. Podnikatelé meziválečného Československa ve víru konjunktur a krizí, ed. Drahomír Jančík and Barbora Štolleová (Prague: Maxdorf, 2014); Moderní podnikatelské elity. Metody a perspektivy bádání, ed. Jiří Štaif (Prague: Dokořán, 2007); Milan Myška, “Tlach und Keil. Kapitola z historie slezské rodinné firmy éry industrializace (1809–1918),” Hospodářské dějiny/Economic history 26, no. 1 (2011): 68–90.

10 On the Industrial Revolution in the Bohemian Crown Lands see Milan Myška “The Industrial Revolution: Bohemia, Moravia and Silesia,” in Industrial Revolution in National Context, ed. Mikuláš Teich and R. M. Porter (Cambridge: Cambridge University Press, 1996), 247–67.

11 There are two monographs on the Klein family’s business activities: Mojmír Krejčiřík, Kleinové. Historie moravské podnikatelské rodiny (Brno: Archiv města Brna, 2009); Petr Popelka, Zrod moderního podnikatelstva. Bratři Kleinové a podnikatelé v českých zemích a Rakouském císařství v éře kapitalistické industrializace (Ostrava: Ostravská univerzita, 2011).

12 Ernst Bruckmüller, Sozialgeschichte Österreichs (Vienna–Munich: Herold Verlag, 2001), 235.

13 The scarcity of self-made men among German and Austrian entrepreneurs during the nineteenth century is noted by most researchers. Jürgen Kocka, Unternehmer in der deutschen Industrialisierung (Göttingen: Vandenhoeck & Ruprecht, 1975); Hartmut Kaelble, Soziale Mobilität und Chancengleichheit im 19. und 20. Jahrhundert (Göttingen: Vandenhoeck & Ruprecht, 1983); Toni Pierenkemper, “Entstehung und Wandel der deutschen Unternehmerschaft im 19. und 20. Jahrhundert,” Prager wirtschafts- und sozialhistorische Mitteilungen 8 (2007/2008): 79–94; Popelka, Zrod moderního podnikatelstva, 40–57.

14 On the myth of the founding fathers in the business sphere see Kim Christian Priemel, “Heldenepos und bürgerliches Trauerspiel. Unternehmensgeschichte im generationellen Paradigma,” in Generation als Erzählung. Neue Perspektiven auf ein kulturelles Deutungsmuster, ed. Björn Bohnenkamp, Till Manning, and Eva Maria Silies (Göttingen: Wallstein Verlag, 2009), 107–28.

15 Johann Friedrich Klein was born in the North Moravian community of Wiesenberg (today Loučná nad Desnou) to a German Catholic family. He and his wife Marie (who, like him, was of peasant origins) had a total of nine children (eight sons and one daughter), of whom six sons survived into adulthood: Josef Engelbert (1792–1830), Engelbert (1797–1830), Franz (1800–1855), Libor (1803–1848), Albert (1807–1877), and Hubert (1811–1856). All the sons subsequently became involved in business together and created the family firm Gebrüder Klein. Members of the subsequent generations who played an active role in the business were Josef Engelbert’s sons Engelbert (1825–1856; he studied at the Vienna Technical University, and his uncle Franz recruited him as a construction site manager in the family firm) and Eduard (1827–1868; he was a co-owner of the family ironworks), Libor Klein’s son Libor (1832–1896; he studied at the Prague Polytechnic Institute and was involved in managing the family mining business), and (most notably) the offspring of Franz Klein: Franz II. Klein (1825–1882; after technical studies and his father’s death he became the closest business partner of his uncle Albert) and Franz III. Klein (1851–1930; he studied at the Vienna Technical University and managed the family firm Gebrüder Klein  until it was dissolved in 1908). For more on the Klein family see Popelka, Zrod moderního podnikatelstva, 145–69.

16 Krejčiřík, Kleinové, 25–73.

17 Petr Popelka, “Sociální začleňování špičkových měšťanských podnikatelů éry průmyslové revoluce na příkladu moravské podnikatelské rodiny Kleinů,” Slezský sborník 108 (2010): 204–33.

18 Petr Popelka, Zrod moderní dopravy. Modernizace dopravní infrastruktury v Rakouském Slezsku do vypuknutí první světové války (Ostrava: Ostravská univerzita, 2013), 58–72; Petr Popelka, “Firma ‘Gebrüder Klein’ jako příklad rodinného velkopodnikání éry průmyslové revoluce,” Hospodářské dějiny/Economic History 26, no. 1 (2011): 40–44.

19 Popelka, Zrod moderního podnikatelstva, 175.

20 Paul Mechtler, “Bauunternehmer und Arbeiter in der ersten Staatsbahnperiode Österreichs (1842–1858),” Österreich in Geschichte und Literatur 12 (1968): 317–30.

21 Geschichte der Eisenbahnen der österreichisch-ungarischen Monarchie (Vienna–Teschen–Leipzig, 1898).

22 Petr Popelka, “Podnikání a životní styl špičkových měšťanských podnikatelů éry průmyslové revoluce ve světle pozůstalostních spisů. Příklad moravské velkopodnikatelské rody Kleinů,” Časopis Matice moravské 129 (2010): 45–77.

23 Milan Myška, Proto-industriální železářství v českých zemích. Robota a jiné nucené práce v železářských manufakturách (Ostrava: Ostravská univerzita, 1992); Milan Myška, “Šance a bariéry měšťanského podnikání v báňském a hutním průmyslu za průmyslové revoluce (na příkladu olomouckého podnikatele Josefa Zwierziny),” Vlastivědný věstník moravský 36 (1984): 261–76.

24 Zdeněk Pokluda, “Pronikání buržoasie do sféry deskového velkostatkářského vlastnictví na Moravě v polovině 19. století,” Vlastivědný věstník moravský 33 (1981): 165–78.

25 On the concepts of aristocratization and feudalization see Hartmut Kaelble and Hasso Spode, “Sozialstruktur und Lebensweisen deutscher Unternehmer 1907–1927,” Scripta Mercaturae 24 (1990): 132–78; Hans Ulrich Wehler, Deutsche Gesellschaftsgeschichte III. Von der “Deutschen Doppelrevolution” bis zum Beginn des Ersten Weltkrieges 1849–1914 (Munich: C.H. Beck, 1995), 718–23.

26 Milan Myška, “Hermann Dietrich Lindheim. Kladský podnikatel a počátky moderní industrializace v habsburské monarchii,” in Milan Myška, Rytíři průmyslové revoluce, 172–210; Myška, “Tlach und Keil,” 68–90.

27 Popelka, “Podnikání a životní styl,” 45–77.

28 Nikolaus Reisinger, Franz Riepl und seine Bedeutung für die Entwicklung des österreichischen Eisenbahnwesen, PhD diss. (Graz: Karl-Franzens-Universität Graz, 1999); Nikolaus Reisinger, “Franz Riepl und die Anfänge des österreichischen Eisenbahnwesens,” in Forschungen zur Geschichte des Alpen-Adria-Raumes, ed. Herwig Ebner (Graz: Karl-Franzens-Universität Graz, 1997), 307–32.

29 Miloň Dohnal, “Tradice železářství na Sobotínsku a podnikatelská účast hraběte Antonína Friedricha Mitrowského a prof. F. X. Riepla na vzniku a výstavbě Sobotínských železáren,” Sborník prací Filozofické fakulty Ostravské univerzity 208 (2003): 59–67; František Spurný, “Příspěvek k dějinám sobotínských železáren v 50. – 70. letech 19. století. Biografie Aloise Scholze,” Rozpravy Národního technického muzea 77 (1980): 81–90.

30 Ivo Kruliš, Sto let kladenských železáren (Prague: Práce, 1959), 22–24.

31 Pavla Bílková, “Podnikání bratří Kleinů v Železné u Vrbna pod Pradědem (1852–1875). Neznámá kapitola z dějin severomoravské podnikatelské rodiny,” Severní Morava 40 (1980): 10–16.

32 Milan Myška, “Ostravská epizoda v počátcích podnikatelské činnosti bratří Kleinů,” Slezský sborník 90 (1992): 189–201.

33 Krejčiřík, Kleinové, 336–41.

34 The properties consisted of six apartment blocks and building plots at Landstrasse, two houses in Erdberg, three houses in Leopoldstadt, and two houses at Praterstrasse. The building at Praterstrasse 42 was the official head office of Gebrüder Klein from 1878. In the mid-1880s, the Kleins owned a total of 18 buildings in Vienna. In addition to their Vienna properties, the members of the family also used numerous other properties. Franz II. Klein and his family used a large house in Brno (Brünn) and the chateau in Loučná (Wiesenberg), while Albert Klein used the chateaux in Sobotín (Zöptau) and Jindřichov (Hennersdorf).

35 Alfred Dupont Chandler, Strategy and Structure. Chapters in the History of the Industrial Enterprise (Cambridge, MA: MIT Press, 1970); Hartmut Berghoff, Moderne Unternehmensgeschichte. Eine themen- und theorieorientierte Einführung (Paderborn: Ferdinand Schöningh Verlag, 2004), 63–82.

36 Spurný, “Příspěvek k dějinám sobotínských železáren,” 81–90; František Spurný, “Friedrich Klein a poslední pokusy o záchranu severomoravského železářství,” Rozpravy Národního technického muzea 82 (1981): 131–35; Václav Štěpán, “Důlní podnikání bratří Kleinů v Ostravě a montanista Anton Péch (1822–1895),” Ostrava. Příspěvky k dějinám a současnosti Ostravy a Ostravska 18 (1997): 293–307.

37 Krejčiřik, Kleinové, 208.

38 This provision was fully in line with the usual practice of family businesses at the time. Rudolf Boch, “Unternehmensnachfolge in Deutschland. Ein historischer Rückblick,” Zeitschrift für Unternehmensgeschichte 44 (1999): 164–65.

39 The legal form of general partnerships was particularly popular among family businesses. Sachse, “Familienunternehmen in Wirtschaft und Gesellschaft,” 16.

40 Opava Provincial Archives (=OPA), Olomouc branch, fonds “Rodinný archiv Kleinů,” cart. 1, inv. no. 35; Popelka, “Firma ‘Gebrüder Klein’ jako příklad rodinného velkopodnikání,” 54–58.

41 Krejčiřík, Kleinové, 377.

42 Herbert Matis, Österreichs Wirtschaft 1848–1913 (Berlin: Duncker & Humblot, 1972), 170–98; Dějiny hospodářství českých zemí od počátků industrializace do konce habsburské monarchie, ed. Ivan Jakubec and Zdeněk Jindra (Prague: Karolinum, 2006), 169–72; an analysis is given in Milan Myška, “Vliv výstavby železniční sítě na rozvoj hutnictví železa v habsburské monarchii a v českých zemích (1830–1914),” Rozpravy Národního technického muzea 118 (1989): 104–86; Milan Myška, “Eisenbahnen – Eisenhüttenindustrie – Wirtschaftswachstum: Der Einfluss des Ausbaus des Eisenbahnnetzes auf die Entwicklung des Eisenhüttenwesens in der Habsburgermonarchie 1830–1914,” Prager wirtschafts- und sozialhistorische Mitteilungen 7 (2004–2005): 9–47; Milan Myška, Die mährisch-schlesische Eisenindustrie in der industriellen Revolution (Prague: SPN, 1970).

43 Alfred Niel, “Die österreichischen Eisenbahnen von der zweiten Staatsbahnperiode bis zum Ersten Weltkrieg,” in Verkehrswege und Eisenbahnen, ed. Karl Gutkas and Ernst Bruckmüller (Vienna: Institut für Österreichkunde, 1989), 87–99; Alois Czedik, Der Weg von und zu den Österreichischen Staatsbahnen, vol. 1 (Vienna–Teschen–Leipzig: n.p. 1913), 207–23.

44 Ivan Jakubec, “Tři generace podnikatelské rodiny Lannů: Adalbert Lanna senior, Adalbert Lanna junior, Adalbert Franz Lanna,” in Historie a cestovní ruch. Perspektivní a podnětné spojení, ed. Jan Štemberk and Miroslava Manová (Prague: Vysoká škola obchodní, 2009), 35–47.

45 Krejčiřík, Kleinové, 368–69.

46 OPA, Olomouc branch, fonds “Rodinný archiv Kleinů,” cart. 1, inv. no. 35; Popelka, “Podnikání a životní styl,” 45–77.

47 Andreas Paulsen, “Das ‘Gesetz der dritten Generation,’” Der praktische Betribswirt. Die aktive betriebswirtschaftliche Zeitschrift, May 21, 1941, 271–80; Kocka, “Unternehmer in der deutschen Industrialisierung,” 53.

48 Popelka, Zrod moderního podnikatelstva, 147–258.

49 Petr Popelka, “Sociální začleňování špičkových měšťanských podnikatelů éry průmyslové revoluce na příkladu moravské podnikatelské rodiny Kleinů,” Slezský sborník 108 (2010): 226–29.

50 On the situation in Moravia see Aleš Zářický, “Moravskoostravští měšťanští podnikatelé na cestě od rodinných firem k nadnárodním společnostem. K problematice změn forem podnikání na konci 19. a na počátku 20. století,” in Královská a poddanská města od své geneze k protoindustrializaci a industrializaci, ed. Jiří Jurok (Ostrava–Nový Jičín–Příbor: Ostravská univerzita, 2002), 221–49.

51 Popelka, “Firma ‘Gebrüder Klein’ jako příklad rodinného velkopodnikání,” 59–65.

52 Sachse, “Familienunternehmen in Wirtschaft und Gesellschaft,” 17–18.

53 František Procházka, “Vznik a zánik železáren v Sobotíně,” Sborník krajského vlastivědného muzea Olomouc 4 (1956–1958): 209–10; Spurný, “Friedrich Klein,” 131–35.

54 Peter Eigner, Die Konzentration der Entscheidungsmacht. Die personellen Verflechtungen zwischen den Wiener Grossbanken und Industrieaktiengesellschaften 1895–1940 (PhD diss., Univ. Wien, 1997).

55 Popelka, “Firma ‘Gebrüder Klein’ jako příklad rodinného velkopodnikání,” 37–67.

Volume 4 Issue 4 CONTENTSpdf

Judit Klement

How to Adapt to a Changing Market?

The Budapest Flour Mill Companies at the Turn of the Nineteenth and Twentieth Centuries

 

The focus of this article is the steam mill enterprises in Budapest at the end of the nineteenth century, a time when these companies were no longer enjoying their most profitable years. While earlier their high-quality flour had been sold for good profits on the markets of Western Europe, they found themselves slowly pushed from the marketplace by increasingly intense price competition, which was in part a consequence of the crisis in agriculture and, quite simply, the globalization of agriculture. While they were still able to produce for the undeniably important markets within the Austro-Hungarian Monarchy and ever higher customs duties on agricultural products helped strengthen their production for these markets, the demand for expensive flour on the domestic market was significantly smaller than in Western Europe. Confronted with the changes that had occurred in the marketplace, the mills in Budapest tried to adapt in a variety of different ways. In this article, I examine these strategies, focusing in particular on the very distinctive expansion of one of the mill companies.

Keywords: steam mill, agricultural crises, Hungary, Budapest, turn of the nineteenth and twentieth centuries, lobby activity, cooperation

 

The milling industry was the first branch of the economy in Hungary to represent modern, mechanized, large-scale industrial production. On the basis of production and exports, the milling industry was the leading branch of industry in Hungary in the nineteenth century.1 The most modern, best equipped large enterprises within this industry, the ones that were able to produce the largest quantities of flour, were found in Budapest. All of these enterprises were engaged in business on a relatively large scale. They used steam engines, which were in virtually continuous operation and produced flour for sale.2 Growth in the Budapest steam milling industry began in the 1850s and burgeoned in the 1860s and 1870s.3 Neither the so-called small crisis of 1869 nor the crash of 1873 did much to upset the position of the mill enterprises. These crises did not result in any long-term loss of profits, nor did they compel the companies to reconsider or restructure their positions in the marketplace.4 However, beginning in the 1880s, market conditions began to change significantly, and this did force the steam mill companies of Budapest to adapt to shifting circumstances. The ways in which they attempted to do this are the focus of my inquiry.

In the Background: The Globalization of Agriculture

Beginning in the 1880s, there was a glut of grain on the European markets, and grains began to be imported in large quantities from the United States, Canada, Argentina, India, and Russia. As a result of this glut, the prices of agricultural products began to drop dramatically, and the governments of Europe began to adopt increasingly protectionist policies with regards to customs duties, which first and foremost meant the introduction of duties on agricultural imports, duties which gradually rose.

The falling prices affected all agricultural products, which is why the period that began in the 1880s and lasted until the mid-1890s is referred to as a time of agricultural crisis in the secondary literature.5 All in all, the duties made both the purchase of grains (the raw material) from abroad and the export of flour (the semi-finished product) more expensive, while at the same time, though the raw material could be obtained at a lower price, the prices of flour were also dropping.

While this agricultural crisis was underway, the United States began to emerge as an increasingly competitive rival to Hungarian production of flour on the world market. The entry of American flour on the European markets was another sign of the globalization of agriculture. Beginning in the 1880s, the mills in the area around Minneapolis dramatically increased their production capacities.6 Economic development in the post-Civil War years provided the foundation for growth in Minneapolis. In the wake of the war, tremendous territories in the western United States were being cultivated and grains were being harvested. Train lines were under construction, which made it possible to transport the grains produced in the west and the mid-west to the east coast. In addition, steamboat travel between the United States and Europe was becoming increasingly frequent, and this further favored exports. Thanks to the efficiency of the network of train and steamboat companies in the United States, grains and flour from Northern America was less expensive on the West European markets, even with the increasingly punitive customs duties, than the grains and flour produced by Hungarian competitors.7 The production of flour in the United States was almost completely automatized, which meant both continuous production and low production costs.8 Both of these factors made American flour more competitive from the perspective of price. In addition, because American grains were similar from the perspective of the hardiness of the individual seeds to Hungarian grain, the ground flour was also of a similar quality.9 It was no coincidence that American engineers were very interested in the various innovations that were being introduced in the milling industry in Budapest, and they rapidly adopted similar measures in the United States,10 which meant that Budapest began to lose its technological advantage.

As a consequence of these developments, in the 1880s Hungarian grains and, first and foremost, the various kinds of flour produced in Budapest began to find themselves crowded out of the foreign customs markets. The domestic customs market, i.e. the Austro-Hungarian Monarchy, increasingly became the most important market for grains and flour.11 While in 1882, 53 percent of Hungarian flour remained in the territories of the Monarchy, by 1912 this number had grown to 87 percent (see Figure 1).

 

Figure 1. Hungarian flour exports to Austria and in total, between 1882 and 1912, in quintals

Source: Annual reports of the Budapest Chamber of Commerce and Industry from 1882 to 1912.

 

This represented a tremendous loss of markets for the steam mill enterprises of Budapest, which had sold their finely ground flours first and foremost on the markets in Western Europe (Great Britain, Germany, Switzerland, France, Holland, and Belgium), but also on markets in comparatively distant lands, such as Brazil, the Dutch East Indies, and South Africa. The markets within the Austro-Hungarian Monarchy simply were not capable of purchasing such large quantities of high-quality flour, and thus, the growth in the amount of exported flour notwithstanding (see Figure 1), for the mill companies of the Hungarian capital the market for expensive high-quality ground flours significantly shrank.

The Positions of the Budapest Mill Enterprises at the End of the Nineteenth Century

If one focuses exclusively on production, there were no indications that the mill companies of Budapest faced any particular problems at the end of the nineteenth century. In 1875, they produced a total of only 3,148,117 quintals. By 1910, this number risen to 7,222,229. In three individual years (1886, 1906, and 1907), they produced more than 8 million quintals. Until the mid-1890s, growth was continuous. From then on, production stagnated, moving between 6 and 8 million quintals (see Figure 2).

 

Figure 2. The sum total output of the Budapest steam mills between 1875 and 1910
(wheat, in quintals)

Source: Annual reports of the Budapest Chamber of Commerce and Industry from 1878 to 1910; Milling industry statistics, 1894.

A note on the terminology: “sum total” refers to the sum of the production data for all of the enterprises.

“Sum total (- Első Bp.)” refers to the sum of the production data, not including the data for the Első Budapest Rt. [First Budapest Joint Stock Company], which produced the largest quantities in Budapest.

 

Thus, neither the agricultural crisis nor the shifts that were taking place in the agricultural marketplace caused a drop in production. This was due in part to a deliberate business policy which could be referred to as an attempt to “escape by getting ahead,”12 since the companies attempted to address the problems caused by dropping prices by increasing production. Growth in production was also furthered by the introduction of the processing trade by the state.13

The processing trade made it possible for the mills to import grain without having to pay customs duties if they could export a given amount of milling product before a given deadline. The processing trade was not a new institution or phenomenon. As a practice, it had existed before, and it was familiar and part of established practice abroad as well.14 In Hungary, the second point of the tenth paragraph of law XVI of 1882 on the general customs and excise tariff for the customs area of the Austro-Hungarian Monarchy made it possible for this practice to be introduced again.15 The implementation of the law as it applied to the milling industry was regulated by a decree issued in the same year by the Ministry of Finance.16

According to the decree, the grains that were imported were free of customs duties, or rather the duties were refunded, if, within a year of having imported 100 kilograms of wheat, a given company exported 70 kilograms of wheat flour. In the case of rye, 65 kilograms of rye meal had to be exported for every 100 kilograms imported. (It is worth noting that these proportions correspond approximately to the quantity of wheat and rye meal that can be obtained from the grinding process. Bran was thus free of customs duties according to the decree.) The companies had to register the imported grains and the exported flour at the appropriate customs house. The decree specified only that the grain products that were exported had to correspond with the kinds of grain that were imported “according to their kind.” In other words, wheat that had been imported was free of customs duties if the company that imported it exported wheat flour. The decree makes no more specific mention of the raw materials or finished products, thus the companies did not actually have to demonstrate that the milling product that was exported was actually made using the grains that had been imported. By refunding customs duties, the government sought to ensure that the customs duties that were introduced in 1882 in the Monarchy did not have a negative influence on the volume of flour exported. Yet at the same time, the government also wanted to prevent duty-free grains from leading to price wars on the domestic market.

The leaders of the Budapest mill companies were unambiguous in their praise of the processing trade, and indeed they characterized it as life-saving. In their view, it helped compensate for the increased costs that had come with the introduction of customs duties on grains and flours.17 The processing trade was unquestionably one of the factors behind the growth in production. This is demonstrated quite clearly by the fact that the growth in production coincided with the introduction of the processing trade. In 1896, limits were placed for the first time on the discounts that were offered by the processing trade (for 100 kilograms of wheat, a company had to export 100 kilograms of wheat flour), and in 1900 the institution was eliminated altogether. In the case of the Budapest mills, production stopped growing in the 1890s.

The processing trade was the most vigorously opposed by the alliance of Hungarian landowners (Országos Magyar Gazdasági Egyesület, OMGE), since they regarded it as the primary cause of the drops in the prices of grain on the domestic market, and they also considered it a kind of cheating that there was no way of verifying that the milling products that were exported were actually made using the grains that had been imported. The OMGE had the support of Austrian farmers and Austrian and Czech industrial interests as well. Towards the end of the 1890s, in the course of negotiations intended to lead to the next economic compromise, the Austrians were adamant about the elimination of the processing trade, and in the course of similar negotiations in 1907 they were strongly opposed to its reintroduction. This demonstrates clearly that the question of the processing trade was not only a Hungarian issue.18

While the leaders of the milling enterprises in Budapest protested vociferously against the limitations placed on processing trade and later its elimination and, indeed, in the wake of World War I expected that it would be reintroduced, it is not immediately apparently that this would have had any significant effect on their profits. A contemporary market analyst made this contention in 1910, and my analyses support his conclusion.19 However, the debate concerning the processing trade played a considerable role in the ever more active presence of lobbyists working in support not only of the interests of the Budapest milling industry, but also in the interests of Hungarian industry in general. It is hardly coincidental that the National Alliance of Industrialists, an organization devoted to the defense of industry interests, was founded in 1900, in Hungary.

Since most of the Budapest milling enterprises were joint stock companies, their balance sheets, which were public information, allow for study of the successes and failures of their business ventures. In order to provide an overview of their circumstances at the end of the nineteenth century, I offer a summary of the results of my examination, forgoing diagrams and detailed analysis in the interests of brevity and space.20

The effects of the agricultural crisis were most immediately apparent in their profitability. (Profitability is measured here by earnings as a percentage of own capital, the latter of which is the sum of invested capital, reserves and write-offs, and earnings.) As of the early 1880s, drops in profits among the joint stock mill companies of Budapest were a general trend. Earnings as a percentage of own capital remained around 5 percent from the mid-1880s up to the outbreak of World War I. This constituted a drastic decline, since earlier this proportion had been consistently above 10 percent. The companies never managed to bring in profits comparable to earnings in the mid-1870s.

Drops in profit were followed by drops in dividends. Up until the late 1870s, the Budapest mill companies had reliably paid out annual dividends of more than 10 percent. In the early 1880s, dividends were roughly 15 percent of the nominal value of the stock. This dropped to 5 percent by 1886, and while there were two years in the first half of the 1890s in which dividends again rose to roughly 10 percent,21 5 percent was much more characteristic of the decade. (At the time, in general banks paid 6 percent on deposits.) After 1906, there was one more moment of economic upswing before the outbreak of war. This can be seen in increases in production. Profits also increased marginally, and dividends crept above 5 percent, but they remained below 10 percent on average. At the same time, one should add, with regards to dividends that according to the management reports most of the mill companies strove to pay at least 5 percent, even in the worst years, even if they had to dip into reserves in order to do this. In general, the companies set aside dividend reserves for this purpose.

The prices of shares of stock in the Budapest milling enterprises suggest similar economic trends. Until the mid-1880s, the shares remained roughly around 150 percent of their nominal value on the stock market. After 1885, their value dropped a bit, but remained above the nominal value. Share prices also reflect the brief period of growth in the first half of the 1890s, when on average they exceeded 150 percent of their nominal value, only then to plummet back down to 100 percent, where they remained for another decade. Beginning in 1906, share prices again reflect the period of upswing before World War I. Shares rose to and even went above 150 percent of their nominal value. Nonetheless, from the mid-1890s on, shares in milling enterprises fell out of the club of best investments, and they never became a part of this group again.22

While share prices only began to reveal the precariousness of the positions of the milling enterprises in the mid-1890s, the credit indicators at the Pest branch of the Austro-Hungarian Bank indicated potential concerns as early as the mid-1880s. This institution played the role of central bank at the time, and the decisions regarding which enterprises were given loans and how much they would be given reflected the market position of the given company or branch of industry. In the mid-1880s, the Austro-Hungarian Bank began to reduce the amounts of the loans that were made to the Budapest mill companies, though earlier they had regarded the credit of these businesses as particularly favorable. In 1890–91, the amounts of the loans that were given to some individual companies began to increase, though given the absence of sources, we know little about how this development progressed.23 At the same time, on the basis of the balance sheets, we do have an overview of the indebtedness of the Budapest milling enterprises. In other words, we can consider this question from the perspective of the borrowers. According to the balance sheets, the proportion of foreign capital to company capital followed the trend suggested by the Austro-Hungarian Bank’s credit indicators. In the 1880s and particularly in the latter half of the decade, the amount of foreign capital dropped slightly on the balance sheets. However, beginning in the 1890s, it began to grow again, and it continued to grow symptomatically until World War I.24 Furthermore, in the periods in which foreign capital was lower, the enterprises demonstrated that they wanted to hold proportionally larger funds in reserve and also that they were capable of a larger degree of internal financing. From the 1870s until the early 1890s, the amounts set aside in reserves grew continuously at the Budapest milling enterprises, but even when they ceased to grow, they still remained at the levels at which they had been at the end of the 1880s. The same was true of the companies’ ability to use internal sources to finance operations.

To summarize, the data that I have presented on the Budapest milling enterprises at the end of the nineteenth century illustrate clearly that the economic circumstances of these enterprises began to change dramatically beginning in the 1880s. Profits, which earlier had poured in, began to run dry, dividends and share prices dropped, and external sources of credit temporarily declined. While it is quite apparent that they were compelled to make significant strategic shifts in order to adapt to shifting market conditions, this period was not nearly as dire from the perspective of the fates of these companies and the challenges that they had to face as the post-war period, which bore witness to a fatal decline in market position.25 Rather, in the period before the outbreak of World War I, on the basis of the data the milling enterprises simply seem to have been part of a branch of industry that was no longer growing.26 However, the shift in their positions on the market also led to changes in the business policies and strategies of these companies.

Adaptation to the Market

The continuous growth in production, which lasted until the mid-1890s, and the strengthening of the tendency to set aside funds in reserves that could even be used to pay dividends both indicate attempts on the part of the companies to adapt to shifting circumstances. But the genuinely striking shift came with efforts among the various enterprises to promote cooperation and hold onto or acquire new markets.

As the Budapest mills, far from cutting production, actually increased it, the abovementioned narrowing of their markets led to a glut. The companies attempted to address this problem by agreeing on shared production limits. Company leaders met almost every year to attempt to arrive at some consensus, and these meetings were always recorded in the annual reports of the boards of directors. However, even if an agreement were reached regarding mutual cuts in production that would last a few months, it was not at all certain that either party would actually stick to the terms of the agreement. The annual reports contain recurring complaints concerning the necessity of cutting back production, which was justified because of the accumulating stockpiles, and the failures of the negotiations to reach an agreement concerning mutual reductions of operations. Earlier, there had been hardly any examples of the milling enterprises of Budapest attempting to work together in their own shared interests.27

The failure of the companies to negotiate a meaningful form of cooperation was one of the factors that galvanized their efforts to acquire new markets. Beginning in the 1890s, the milling enterprises of the Hungarian capital strove to purchase mills in settlements in the countryside and, thereby, to obtain their markets. While the Budapest mill companies had vibrant and effective ties with enterprises and markets beyond the borders of the Austro-Hungarian Monarchy (the strength of which, however, decreased with the loss of markets in the wake of the agricultural crisis), the milling enterprises outside of Budapest enjoyed advantageous positions on the markets within the Monarchy and in Hungary. Thus, by acquiring the mills outside of Budapest, the mill companies in the capital had more opportunities to sell on the domestic market, which also meant avoiding having to pay customs duties.28

Towards the end of the nineteenth century, some of the Budapest milling enterprises began to merge, and this represented another manner of acquiring new markets. Pannónia and the Erzsébet Gőzmalom Rt. (Erzsébet Steam Mill Joint Stock Company) merged in 1896. Over the course of a decade of aggressive business moves, one of the enterprises, Első Budapesti Gőzmalom Rt. (First Budapest Steam Mill Joint Stock Company), managed to acquire four of its competitors. This “hostile maneuvering” began at the turn of the century and continued to lead to mergers in the late 1920s and the mid-1930s.

The Expansion of the First Budapest Steam Mill Joint Stock Company

I have addressed the circumstances of and challenges faced by the milling enterprises of Budapest in general thus far, making no mention of the at times quite considerable differences among them. However, at the beginning of the twentieth century, two of the companies in the Hungarian capital began to get well ahead of their competitors from the perspective of business and production results, the Victoria Steam Mill Joint Stock Company and the First Budapest Steam Mill Joint Stock Company. Victoria Steam Mill had significant financial backing from abroad, primarily from England, and grew in part because of expansion into the Balkans. The First Budapest Steam Mill Company had support from domestic banks and developed a network of enterprises that for a long time was not overly conspicuous. In the rest of my study, I focus on the details of this story.29

The relationships between the companies first became noticeable because of the presence of certain individuals. Leaders of the First Budapest Steam Mill Company all of a sudden would acquire roles on the boards of directors and the supervisory committees of other mill companies in Budapest,30 specifically as of 1904 at the Pesti Molnárok és Sütők Gőzmalma Rt. (Pest Millers and Bakers’ Steam Mill Joint Stock Company) and the Lujza Gőzmalom Rt. (Lujza Steam Mill Joint Stock Company) and as of 1912 at the Erzsébet Gőzmalom Rt. (Elisabeth Steam Mill Join Stock Company). From 1904 to 1907, three of the at least five people on the board of directors of the Pest Millers and Bakers’ Company came from First Budapest, and in 1907 this number rose to four. In 1905, the relationship became mutual, when the general manager of the Millers and Bakers became one of the eight people serving on the board of directors at First Budapest. In the case of the Lujza Steam Mill Company, as of 1904 First Budapest continuously had three people on the board of directors and one person on the supervisory committee, as of 1911, in the latter two.31 Additionally, in 1914, a new general manager was appointed who also had a position at First Budapest. In return, the interests of Lujza Steam Mill Company were represented on the board of directors of First Budapest by two people, and from 1912 on by one member. First Budapest’s relationship with Erzsébet Steam Mill remained one-sided, meaning people from First Budapest acquired positions at Erzsébet. In 1912, three of the at most ten people on the board of directors were from First Budapest, as were two of the five people on the supervisory committee.32

Earlier, these kinds of personal interconnections had been prohibited by articles of associations. Indeed for this very reason, general meetings had to be held in order to modify the articles of associations. This took place in roughly the same manner everywhere. For instance, in April of 1904, Pest Millers and Bakers made an alteration to the company’s constitution in order to loosen this restriction. The relevant clause of paragraph 35 contained the following stipulation: “[t]he members of the board of directors cannot play roles in the leadership or management of other milling enterprises unless the board of directors gives its unanimous agreement.”33 However, beyond this, nothing took place at the general meetings of these companies that would indicate that some agreement or accord had been reached or some form of cooperation or collaboration was underway with another company.

The reports of the First Budapest board of directors that survived among the writings of the company make some mention of these new relationships, though admittedly only sparing mention. The report on financial year 1903 contained the following passage regarding the relationship of the company to Pest Millers and Bakers and the Lujza Steam Mill:

 

The intense competition with the mills of the capital described in the first section of our report and also the difficulties that arise every time it would be important to arrive at agreements regarding the most significant questions of our industry prompted us, on the subject of drawing other milling companies into our sphere of interest, to give serious consideration to those among the overtures that have again been made to us that we are convinced will not only loyally defend the interests of the shareholders of these companies, but whose collaborative participation will also be advantageous from many perspectives for us and will also correspond to our business goals. And in the end we accept the offers that have been made by the Lujza Steam Mill and the Pest Millers and Bakers’ Steam Mill Companies. [The manner of implementation will be voluntary exchange of shares] in such a manner that we promise the shareholders in the Lujza Steam Mill Company one share in our company in exchange for five shares in the Lujza company and the shareholders in the Pest Millers and Bakers’ Company one share in our enterprise for every three shares in the Millers and Bakers’ Company, and all this without dividend warrants for the 1903 financial year. […]

While it is our intention to maintain the independent organization of the two shareholder companies to be drawn into our sphere of interest, nonetheless, cooperation among three such prominent enterprises, each of which has a production capacity exceeding three-million [quintals] per year, creates numerous advantages and will definitely help us place the business of strong foundations. Furthermore, it will increase the competitiveness of Hungarian flour on the foreign market and thus will perform a useful service for Hungarian exports and, indirectly, the Hungarian economy.34

The reference to “intense competition” and the “difficulties” that arose with regards to reaching agreements on the most important questions indicate that the expansion became the new strategy of First Budapest. Since the company had been unable to arrive at lasting agreements with its competitors, it had chosen another path: “drawing” the other companies into its “sphere of interest.” The board of directors needed a detailed explanation because the proposal to “draw” other enterprises into First Budapest’s “sphere of interest,” i.e. in concrete terms the implementation of “voluntary exchange of shares,” meant that First Budapest would have to issue new shares. So the general meeting of First Budapest had to increase the capital of the company. At the assembly that was held on February 15, 1904, the general meeting voted in favor of raising the capital from 3 million crowns to 4.5 million crowns by issuing 3,000 shares with a nominal value of 500 crowns. Thus, the overlaps between the companies, which were already visible in the presence of First Budapest’s people on the board of directors and supervisory committee of other companies, also became overlaps in ownership.

While the exchange of shares of stock was voluntary, the report of the board of directors of First Budapest indicates the scale of the planned acquisition. According to the report, they offered one share of First Budapest stock in exchange for five shares of stock in Lujza Steam Mill and three shares of stock in Pest Millers and Bakers.35 At the time, Lujza Steam Mill had a capital of 2,800,000 crowns and 8,750 shares of stock with a nominal value of 320 crowns. The Pest Millers and Bakers’ Steam Mill Company had a capital of 1,800,000 crowns with 4,500 shares of stock with a nominal value of 400 crowns. If the shareholders had wished to acquire all of the Lujza stock, they would have needed 1,750 shares of First Budapest stock in order to do so. Similarly, it would have needed 1,500 shares of First Budapest stock in order to acquire all of the Pest Millers and Bakers shares. All in all, this exchange, in both companies, would have required a total of 3,250 shares of First Budapest stock. Since the general meeting of First Budapest had decided to issue 3,000 new shares of stock, they cannot have assumed that the shareholders in Lujza and Pest Milllers and Bakers intended to exchange all of their stock in these companies. However, they were clearly interested in securing a majority share.

If we consider the offer from the perspective of the Lujza and Pest Millers and Bakers shareholders, the exchange of stock does in fact seem to have been a reasonable proposition. Since 1900, stock in the Lujza Steam Mill Company had been weaker with each passing year, and the value of the stock on the market had remained between 210 and 230 crowns, in other words only 65 to 70 percent of the nominal value. The nominal value of five shares of this stock was 1,600 crows, but even at a bad market price they were worth at least 1,000 crowns, in exchange for which First Budapest was offering one share of its stock, nominally worth 500 crowns but in general fetching at least twice as much on the market. (On December 31, 1903 the market price of First Budapest stock was 1,285 crowns, and on June 30, 1904 it was 1,1000 crowns.) The Pest Millers and Bakers’ Company stock had a better standing on the market than the Lujza stock. They generally closed at a price above their nominal value, and even when the price dipped, it remained around 94 percent, or 375 crowns. The nominal value of three shares of Pest Millers and Bakers stock was 1,200 crowns or, when the price dropped, 1,125 crowns. Thus, the market price of First Budapest stock was roughly equal to that of three shares of Pest Millers and Bakers stock (see Figure 3).36

Figure 3: Market prices of shares of stock in the Budapest milling enterprises
as a percentage of their nominal value.

A note on the terminology: “average” refers to all of the enterprises; “average - Első Bp.” refers to average market value of stocks, not including the data for the Első Budapest Rt. [First Budapest Joint Stock Company]; “average - Első Bp. - Viktória” refers to average market value of stocks, not including the data for the Első Budapest Rt. [First Budapest Joint Stock Company] and for Viktória Steam Mill Joint Stock Company.

Source: Tőzsdelap, 1900–1914.

The documents of the companies contain no details concerning the actual implementation of the exchange of stocks, nor is it actually clear that either the Lujza Steam Mill Company or Pest Millers and Bakers actually sought to establish a relationship with First Budapest. However, the shares that were represented in the course of general meetings offer some insights into the rearrangement of the shareholdings. Since the voting power of an individual shareholder at an assembly was always proportionate to the number of shares he possessed (in compliance with the proportion of shares to votes specified in the articles of association of the company), in order to determine the number of votes for a given assembly the shareholders had to present their shares which they intended to have in votes at the general meeting. This presentation always took place before the general meeting, mainly in a bank or at the pay desk of the company. The lists of shareholders that were compiled became part of the minutes of the general meeting and thus constituted documents that had to be submitted to the registry court. If they survived among the documents of the company or the registry court, they enable us to reconstruct the circle of proprietors of a joint stock company. However, the fact that only a small fraction of shareholders actually showed up for the assemblies does significantly limit the usefulness of these lists.37 Fortunately, in the case of the Lujza Steam Mill Company and the Pest Millers and Bakers’ Steam Mill Company the lists for 1904–1914 are available, with the exception of the Millers and Bakers list for 1912, thus I was able to draw on these sources.38

The First Budapest Steam Mill Company does not figure a single time on any of the lists of shareholders. In other words, the company used individuals to further its interests at the assemblies. Thus, with regards to the presence of the company as a shareholder and owner, one must consider the shares of stock held by the people that represented First Budapest.

The people who had positions at the Pest Millers and Bakers’ Steam Mill as of 1904 and at the same time represented the interests of First Budapest were all present at the general meetings as shareholders. Their combined share in the company was small at first, reaching barely 1 percent, but by 1905 and 1906 it had risen to 5 percent, and as of 1907 it remained around 10 percent (see Table 1).

 

 

1904

1905

1906

1907

1908

1909

1910

1911

1913

1914

Sándor halmi Deutsch

10

 

 

100

100

100

 

 

 

 

Károly Haggenmacher

10

100

100

100

100

100

 

100

150

150

Jakab Lang

10

 

 

 

 

 

 

 

 

 

Ede Langferder

10

100

100

100

100

100

100

100

150

150

Ottó Mayer

 

 

 

100

100

100

100

100

100

150

Henrik rátonyi Reusz

10

 

50

 

 

50

100

100

100

150

Jakab Schuk

10

30

60

30

30

30

30

30

 

 

Number of shares of stock owned by them

60

230

310

430

430

480

330

430

500

600

Shares of stock owned by them as a percentage of the total number of shares in the company (%)

1.3

5.1

6.9

9.6

9.6

10.7

7.3

9.6

11.1

13.3

Total number of shares of stock presented at the assemblies

1853

1190

1180

1280

1030

1350

1150

1290

1470

1460

Total shares of stock presented at the assemblies as a percentage of the total number of shares in the company (%)

41.2

26.4

26.2

28.4

22.9

30.0

25.6

28.7

32.7

32.4

 

Table 1: Shareholdings of the people who represented the First Budapest Steam Mill Company at the general meetings of the Pest Millers and Bakers’ Steam Mill Company, 1904–1914

 

Not all of the people who represented First Budapest and had come to play important roles at Lujza from 1904 were listed as shareholders at the general meetings, but the tendency was similar. Their presence could not be detected in 1904, but by 1905–1906, they represented almost 5 percent of the shares, and as of 1907 their share ownership hovered around 10 percent (see Table 2).

 

1904

1905

1906

1907

1908

1909

1910

1911

1912

1913

1914

Lajos Gerisch

 

 

 

 

 

 

200

200

200

200

200

Károly Haggenmacher

 

125

125

125

125

200

200

 

 

 

200

Ede Langfelder

 

125

125

375

125

200

200

200

200

200

200

Miksa Löwy

 

125

125

125

125

200

200

200

200

200

200

Ottó Mayer

 

 

 

125

125

200

200

200

200

 

200

Number of shares of stock owned by them

0

375

375

750

500

800

1000

800

800

600

1000

Shares of stock owned by them as a percentage of the total number of shares in the company (%)

0.0

4.3

4.3

8.6

5.7

9.1

11.4

9.1

9.1

6.9

11.4

Total number of shares of stock presented at the assemblies

1146

2000

1875

2375

1875

3200

2800

2800

3000

2400

3000

Total shares of stock presented at the assemblies as a percentage of the total number of shares in the company (%)

13.1

22.9

21.4

27.1

21.4

36.6

32.0

32.0

34.3

27.4

34.3

 

Table 2: Shareholdings of the people who represented the First Budapest Steam Mill Company at the general meetings of the Lujza Steam Mill Company, 1904–1914

 

One can therefore conclude, on the basis of this data, that after 1904, the First Budapest Steam Mill Company managed to acquire 10 percent of both the Lujza and the Pest Millers and Bakers’ Steam Mill companies. However, on the lists of shareholders one finds not only “representatives” delegated by First Budapest, but also other people who had positions at First Budapest, as well as representatives of other enterprises that had been drawn into the sphere of interest of First Budapest. For instance, the general manager of the Lujza Steam Mill was present as a shareholder in the Pest Millers and Bakers’ Steam Mill Company, and vice versa. If one considers all of the people among the Pest Millers and Bakers’ Steam Mill and the Lujza Steam Mill Company shareholders who were in positions at First Budapest or at other companies in the sphere of interest of First Budapest at the same time (for the sake of simplicity I will refer to them as “network people”), their presence is even more striking. They owned almost 20 percent of the shares at these companies. And at this time a stake between 15 and 20 percent in an enterprise meant a majority share (see Tables 3 and 4).39

 

1904

1905

1906

1907

1908

1909

1910

1911

1913

1914

Sándor halmi Deutsch

10

 

 

100

100

100

 

 

 

 

Izidor Déry

10

50

50

50

50

50

100

100

 

 

Henrik Fellner

5

 

 

 

 

 

 

 

 

 

Lajos Gerisch

10

30

 

 

 

30

30

30

50

50

Károly Haggenmacher

10

100

100

100

100

100

 

100

150

150

Kálmán Kovácshegyi

1

 

 

 

 

 

 

 

 

 

Jakab Lang

10

 

 

 

 

 

 

 

 

 

Ede Langfelder

10

100

100

100

100

100

100

100

150

150

Leó Lánczy

10

 

 

 

 

 

 

 

 

 

Vilmos Leipziger

10

100

100

100

 

100

 

 

 

 

Miksa Löwy

10

50

50

50

 

50

50

50

50

50

Ottó Mayer

 

 

 

100

100

100

100

100

100

150

Rezső Renschler

10

30

30

 

 

30

 

 

 

 

Henrik rátonyi Reusz

10

 

50

 

 

50

100

100

100

150

Jakab Schuk

10

30

60

30

30

30

30

30

 

 

Ferenc Waigand

10

100

100

100

100

100

100

100

100

150

Number of shares of stock owned by them

136

590

640

730

580

840

610

710

700

850

Shares of stock owned by them as a percentage of the total number of shares in the company (%)

3.0

13.1

14.2

16.2

12.9

18.7

13.6

15.8

15.6

18.9

Total number of shares of stock presented at the assemblies

1853

1190

1180

1280

1030

1350

1150

1290

1470

1460

Total shares of stock presented at the assemblies as a percentage of the total number of shares in the company (%)

41.2

26.4

26.2

28.4

22.9

30.0

25.6

28.7

32.7

32.4

 

Table 3: Shareholdings of the “network people” on the basis of general meetings
of the Pest Millers and Bakers’ Steam Mill Company between 1904 and 1914

 

1904

1905

1906

1907

1908

1909

1910

1911

1912

1913

1914

Sándor halmi Deutsch

 

125

125

125

125

200

 

 

 

 

 

Izidor Déry

377

250

125

Represented

125

200

200

200

 

 

 

Henrik Fellner

 

 

 

250

125

200

200

 

200

 

 

Lajos Gerisch

 

 

 

 

 

 

200

200

200

200

200

Károly Haggenmacher

 

125

125

125

125

200

200

 

 

 

200

Ede Langfelder

 

125

125

375

125

200

200

200

200

200

200

Leó Lánczy

 

 

 

Represented

 

 

 

 

 

 

 

Vilmos Leipziger

 

125

 

Represented

125

 

 

 

 

 

 

Miksa Löwy

 

125

125

125

125

200

200

200

200

200

200

Ottó Mayer

 

 

 

125

125

200

200

200

200

 

200

Henrik rátonyi Reusz

 

125

125

125

 

200

200

200

200

200

200

Ferenc Waigand

 

 

 

125

125

200

200

200

200

 

200

Number of shares of stock owned

377

1000

750

1375

1125

1800

1800

1400

1400

800

1400

Shares of stock owned as a percentage of the total number of shares in the company (%)

4.3

11.4

8.6

15.7

12.9

20.6

20.6

16.0

16.0

9.1

16.0

Total number of shares of stock owned by people present at the assemblies

1146

2000

1875

2375

1875

3200

2800

2800

3000

2400

3000

Total shares of stock owned by people present at the assemblies as a percentage of the total number of shares in the company (%)

13.1

22.9

21.4

27.1

21.4

36.6

32.0

32.0

34.3

27.4

34.3

 

Table 4: Shareholdings of the “network people” on the basis of general meetings
of the Lujza Steam Mill Company between 1904 and 1914

A note on the terminology: “Represented” means that the given person was represented at the general meeting by another shareholder, and there isn’t any information about the number of his shares.

At the same time, one cannot merely assume that these individuals were members of an organized “network,” rather, one must demonstrate this, so it is worth taking a closer look at the names. The first distinct group that emerges consisted of the highly trained steam mill specialists who were employed at First Budapest, including the head clerk, the company director, the chief accountant, the technical and trade director, and the general manager.40 One also discerns another group among the people who had ties to First Budapest, namely people who were members of the board of directors or the supervisory committee.41 The third group consisted of the general managers of the two mills that had been drawn into the sphere of interest of First Budapest, Ferenc Waigand from Pest Millers and Bakers and Izidor Déry from Lujza. The fourth group was made up of bankers, and they seem to have been the “key” to this network. Leó Lánczy, who had been a member of the board of directors of First Budapest since 1895, had served as the president of the Pesti Magyar Kereskedelmi Bank Rt. (Hungarian Commerce Bank of Pest) since 1881. He was also president of the Budapest Chamber of Commerce and Industry and a member of parliament.42 Henrik Fellner, who became a member of the board of directors at Lujza in 1904 and then at First Budapest in 1907, served as managing director of the Hungarian Commerce Bank of Pest between 1882 and 1911 and then became the head of Leipziger’s spirits and sugar factory.43 (Vilmos Leipziger himself had a close connection to them, and it was hardly coincidental that after Lánczy’s first appearance in 1895 on the board of directors of First Budapest, Leipziger also became a member of the board, nor is it surprising that Fellner became the head of the Leipziger factory after 1911, though it is true that Leipziger himself was not a banker.)

Thus, if one considers the positions played by these individuals in the companies and the influence they exerted as shareholders, the essence of the statement made in the 1903 report issued by the First Budapest board of directors becomes clear and vivid: “cooperation among three such prominent enterprises, each of which has a production capacity exceeding three-million [quintals] per year.” Positions of influence and ownership of significant quantities of stock helped ensure that Pest Millers and Bakers and Lujza would come and remain under the supervision and sway of First Budapest, and in the background the Hungarian Commerce Bank of Pest could wield its influence to further its interests.

Presumably, First Budapest adopted a similar strategy when it drew the Erzsébet [Elisabeth] Steam Mill Company into its sphere of interest in 1912. The overlaps in individuals who served in positions of influence at both companies were also accompanied by the acquisition of stock, in all likelihood through the voluntary exchange of shares. The report of the First Budapest board of directors on financial year 1912 certainly suggests this.44 However, none of the lists of shareholders in the Elisabeth Steam Mill Company after 1880 survives, and we do not even know what kinds of exchanges were offered to Elisabeth shareholders. The Hungarian Commerce Bank of Pest, however, definitely had a presence among the leaders of this company. In 1908, Fülöp Weisz, who had begun his career at the Commerce Bank in 1891, became a member of the board of directors of Elisabeth. By that time, he was already on the board of directors at the bank. In 1911, he became the executive director in his bank, and after the death of Lánczy in 1921 he became the president.45

The Expansion of the First Budapest Steam Mill Seen from Below

Expansion of the First Budapest Steam Mill Joint Stock Company, however, went beyond drawing the Pest Millers and Bakers, Lujza, and later Erzsébet into their “spheres of interest.” In 1916, they exerted their influence on the Pesti Hengermalom Rt. (Pest Rolling Mill Joint Stock Company), which remained independent until 1928, at which point it merged with First Budapest. The case of Pest Rolling Mill differs from that of the other three corporations simply because primary sources have survived that offer insights into the moment when the corporation joined the “sphere of interest” of the First Budapest Steam Mill. In addition, the extraordinary primary sources may also further an understanding of the actual meaning of the expression “belonging to the sphere of interest,” as well as the role that was played by the Hungarian Commerce Bank of Pest.

The minutes of a meeting survive which provide written documentation of how the corporations entered into contact with each other. It is quite telling that the documents were found not in the archives of the companies themselves or the Hungarian Commerce Bank of Pest, nor were they among the office records of the registry court. Rather, they were in a family bequest.46 The minutes of the meeting were taken on February 9, 1916, and six people took part in the meeting.

[R]ecorded […] during the meeting of the representatives of the Hungarian Commerce Bank of Pest, specifically his excellency privy councillor Leó Lánczy and Henrik Fellner, members of the board of directors of the Hungarian Commerce Bank of Pest, and also the board of directors of the First Budapest Steam Mill Company, represented by members of the board of directors his excellency privy councillor Leó Lánczy, Henrik Fellner, and general manager Ede Langfelder, as well as member of the Upper House Sir Konrád Burchard-Bélaváry, Dr. Rezső Burchard-Bélaváry and Dr. Andor Burchard-Bélaváry, the three of whom are representatives of the majority of the shareholders of the Pest Rolling Mill Joint Stock Company.

Thus, Lánczy and Fellner represented both First Budapest and the Commerce Bank. The meeting was held at the home of Konrád Burchard-Bélaváry,47 which means that, in addition to constituting an official record of the discussion, the minutes were also the product of an unofficial and private talk. The parties to the negotiations pledged in writing (and affirmed with their signatures) that until February 17, “the regulations… would remain in word only.” They planned to hold the annual general assembly of First Budapest by February 17, since they needed the authorization of the general meeting in order to execute several points of their agreement. With the proper authorizations, the minutes would become a “legally binding [...] agreement.” (And this did in fact come to pass, as they had expected it would.) Lánczy was the president of the six-person “sitting.” Langfelder kept the minutes.

 

Leó Lánczy […], having opened the meeting, states that he turned to the representatives of the abovementioned majority of shareholders in the First Budapest Steam Mill Company and the Pest Rolling Mill Joint Stock Company with the idea that the Pest Rolling Mill Company join with the First Budapest Steam Mill Joint Stock Company.

According to the minutes, First Budapest sought to establish ties with Pest Rolling Mill, and Ede Langfelder, acting on behalf of First Budapest, had already discussed the preconditions of a closer relationship between the two enterprises before the meeting was held with Rezső Burchard-Bélaváry, representing Pest Rolling Mill. The proposal made by First Budapest should seem familiar: a voluntary exchange of Rolling Mill stock for stock in First Budapest, “in a manner, however, that ensures that the Pest Rolling Mill Company will remain an independent shareholder company.” According to the concrete offer, First Budapest offered one share of its stock in exchange for four shares of stock in Pest Rolling Mill. Anyone who did not wish to take advantage of the exchange could keep their shares of Pest Rolling Mill stock or could sell it to First Budapest for 400 crowns per share in cash. This offer also seemed reasonable, since shares of stock in First Budapest, which had a nominal value of 500 crowns, were fetching 1,860 crowns on the market, while shares of stock in Pest Rolling Mill, which had a nominal value of 300 crowns, were selling for between 300 and 400 crowns on the market in the years leading up to World War I.48

The real value of the minutes, which contained fourteen points, lies in the fact that they shed light on the regulation of details of an affair that was already familiar. For instance, the minutes make clear that the preliminary negotiations touched on the question of the operational and strategic leaders of the company that was being absorbed. The minutes also make note of the stipulation that the members of the board of directors and the supervisory board of Pest Rolling Mill would be allowed to keep their positions in the future, as would the managing directors and white-collar workers. Furthermore, First Budapest offered separate five-year contracts to Károly Stumpf and Andor Burchard-Bélaváry, who had served as managing directors at Rolling Mill, as well as Boldizsár Luby, a wheat buyer, alongside their salaries at the time. These three men were responsible for the everyday operational management of the company.

The fifth point of the minutes stipulates that the next Rolling Mill general meeting had to elect four board of directors’ members and two supervisory committee’ members from First Budapest. According to the text, “the board of directors of First Budapest will disclose the names of the men that it will choose for the board of directors and the supervisory committee of Rolling Mill at a fit and proper time.” As the First Budapest leaders ensured in advance their new members of the governing body, they put it in writing, and they appended the new articles of association of Rolling Mill to the minutes as well, on which the following general assembly, to be held in March, had to vote. The eleventh point of the minutes indicates that, as the parties had agreed, Rolling Mill would also send a representative, specifically Konrád Burchard-Bélaváry, to serve on the board of directors of First Budapest:49 “[The] Hungarian Commerce Bank of Pest, as the owner of the majority share of First Budapest, […] guarantees implementation of this choice.” In other words, the real significance of the Commerce Bank, which consistently referred to itself as a “mediator” in the case, lay in its influence as the majority shareholder of First Budapest Steam Mill Company. The agreement also specifies that Konrád Burchard-Bélaváry would remain president of Rolling Mill and Rezső Burchard-Bélaváry would remain vice president, and, furthermore, that Rezső would succeed Konrád as president and would be paid an honorarium of 10,000 crowns per year.50

The details concerning the exchange of shares are covered in several points. The “task” of the Burchards was “to support and facilitate to the best of their ability the implementation of the intended transaction” and to “pledge to trade 4,040 shares of Rolling Mill stock for shares in First Budapest in the abovementioned way.” Rolling Mill had 8,000 shares of stock in circulation on the market, thus the three Burchards (Konrád, Rezső, and Andor) themselves provided the majority of the shares for the undertaking. According to the agreement, the Hungarian Commerce Bank of Pest would inform shareholders in Rolling Mill of the chance to exchange their stock, and the text of this notice was also appended to the minutes. It is worth citing the beginning of this text:

 

We have the pleasure to inform you that an agreement has been reached, with our intercession, among the representatives of the majority of shareholders in the Budapest firm, First Budapest Steam Mill Company, and the Pest Rolling Mill Company. This agreement has as its goal the nurturing of a closer relationship between the Pest Rolling Mill Company and the First Budapest Steam Mill Joint Stock Company. This agreement can only have a positive impact on the production and trade relations of both enterprises, not to mention the profitability of the stock.

 

The “intercession” of the Commerce Bank also meant that the bank would take possession of the Rolling Mill shares in exchange for a temporary voucher and then would deliver these shares in exchange for First Budapest shares when these First Budapest shares were issued, which would take place after the following general assembly of First Budapest had authorized an increase in the capital. The Rolling Mill shareholders would not have to pay any of the costs of this exchange of shares, as First Budapest and the Commerce Bank had agreed to cover them.51

The contract contained specific provisions concerning the fate of the First Budapest shares that were to be given in exchange for the Rolling Mill shares. The owners-to-be of the 1,010 shares of First Budapest stock that were received in exchange for the 4,040 shares of Rolling Mill stock owned by the Burchards were bound by the terms of the contract not to sell the stock without the express permission of the First Budapest board of directors “for the moment for a period of nine years, i.e. until the expiration of next mandate of the First Budapest board of directors,” i.e. until 1925. Indeed, the contract also stipulated that, “these shares should be disposable at the request of the First Budapest board of directors on the occasions of the First Budapest general meetings with the goal of having its motions passed. In the interests of this goal, these share owners should present their shares before each individual general meeting of First Budapest at a time and place specified in the articles of association.” These conditions applied, according to the minutes, to every new share of First Budapest stock that the three Buchards or “a majority group represented by them” received as part of the exchange. If they wished to sell shares, they had to give First Budapest or a company named by First Budapest the first right to buy. First Budapest wished to keep a close watch on the ownership of its shares of stock in the hands of the Burchards:

 

In December 1924 and every five years thereafter (1929, 1934, etc.), Misters Burchard-Bélaváry must declare in writing to the First Budapest board of directors whether they intend to maintain the block specified in these minutes on the sale of the shares of First Budapest stock in their possession for the duration of the next five-year mandate of the First Budapest board of directors.

The second-to-last point of the minutes clarifies what is meant by the phrase “belonging to the sphere of interest”: in questions pertaining to management, in the future Rolling Mill would have to cooperate continuously with First Budapest:

 

The drafting and finalizing of the Rolling Mill balance sheets for December 31, 1915 and the presentation of a motion to be made to the Rolling Mill general assembly on the question of how to use net profits will take place with the cooperation of the First Budapest board of directors and with their consent.

Undeniably, the market position of the First Budapest Steam Mill Company was continuously growing stronger in the first decade of the twentieth century. In other words, one cannot venture any conclusions concerning the contracts that were concluded between First Budapest and Pest Millers and Bakers and First Budapest and Lujza in 1904 or between First Budapest and the Elisabeth Steam Mill Company in 1912 (these contracts have not survived) simply on the basis of the strategies that were adopted by First Budapest in the acquisition of Pest Rolling Mill in 1916. Those contracts may well have been significantly different, but one can be quite sure that they devoted similar attention to detail when addressing questions of the various levels of strategy and operations, the precise implementation of the exchange of stock, the ways in which the shares of First Budapest stock that were obtained by the leaders of the companies that were brought, as a consequence of the exchange, into the sphere of interest of First Budapest would be handled, and the future forms of cooperation between the enterprises.

The distribution of the shares of stock in Pest Millers and Bakers and Lujza and the agreement discussed above that was reached with Pest Rolling Mill clearly indicate that, as a result of the transactions, First Budapest obtained a majority share in all four enterprises. Undoubtedly, First Budapest needed the support of a bank in order to finance and arrange these acquisitions, which were provided by the Hungarian Commerce Bank of Pest. The representatives of First Budapest then occupied operational and strategic positions at the other companies. Thus, all four enterprises found themselves in a close relationship with First Budapest. However, this was not a one-directional relationship that was entirely dictated by First Budapest. Rather, as a consequence of the agreements that were reached with the companies that were drawn into its sphere of interest, the earlier leaders of these companies for the most part occupied positions on the First Budapest board of directors. They supported its operations by giving their consent, and were also present at the general assemblies of the other companies as shareholders. First Budapest was in the center of the network, and the Hungarian Commerce Bank of Pest was right behind it, but there were also ties between the companies that worked together with them.

It is a bit difficult to find a precise term with which to describe what came into being as a result of the whole process. It was not quite a merger, since the companies continued to operate individually, legally. They had their own independent stocks, which were sold on the market, and they had separate balance sheets and issued annual reports. At the same time, the form of cooperation that emerged was more than a cartel. Certainly, the joint stock mill companies that were in the network harmonized their production efforts, their market presence, and no doubt their prices, but they were bound by more than a mere cartel agreement, since they were also linked by majority ownership. This was almost a kind of national cartel52 or quasi-merger.53 It was, in any case, an unambiguous example of interlocking directorates.

Individuals who played roles both in banking and industry were in the foreground of research on interlocking relationships. In the secondary literature, which used to cast personal ties between banks and industrial undertakings as unambiguous examples of the power and sway of banks, a consensus has gradually emerged according to which the relationships, which were motivated by and based on shared interests, were far more complex and subtle, and took a variety of forms.54 In the case of First Budapest and the Hungarian Commerce Bank of Pest, one cannot speak of a relationship of domination by the bank. In other words, the bank did not control the industrial enterprise. The bank did not directly control the mills. The Pest Millers and Bakers’ Company did not have even a single banker on its board of directors, and the other mill companies had only one, mostly. The bank was a majority shareholder of First Budapest,55 and First Budapest and/or the Hungarian Commerce Bank of Pest became majority shareholders of the Pest Millers and Bakers’ Steam Mill Company, the Lujza Steam Mill Company, the Erzsébet [Elisabeth] Steam Mill Company, and the Pest Rolling Mill Company. Business management was unquestionably handled by First Budapest. Bankers rarely “wound up” in decision-making positions. I can only suggest that the mills and the bank were in continuous agreement throughout the process of absorbing the other companies into First Budapest. The Pest Millers and Bakers’ Steam Mill Company, the Erzsébet Steam Mill Company, and the Pest Rolling Mill Company continued to function as independent enterprises until 1928, and Lujza Steam Mill Company stayed in business until 1936.

Archival Sources

Budapest Főváros Levéltára [Budapest Municipal Archive] (=BFL)

VII.2.e. Cégbírósági iratok [Registry Court Documents] (Cg.)

1193/715. Erzsébet Gőzmalom Rt. [Erzsébet Steam Mill Joint Stock Company]

1211/1. 712, 762, 763. Pesti Molnárok és Sütők Gőzmalma Rt. [Pest Millers

and Bakers’ Steam Mill Joint Stock Company]

1224/675, 676, 667, 668. Lujza Gőzmalom Rt. [Lujza Steam Mill Joint Stock

Company]

XI.1005. Első Budapesti Gőzmalom Rt. [First Budapest Steam Mill Joint Stock Company]

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Thernesz, Vilmos. “Magyar malomipar helyzete a 20. század első felében” [The Situation of the Hungarian Milling Industry in the First Half of the Twentieth Century]. In Műszaki innovációk Magyarországon [Technological Innovations in Hungary], edited by Walter Endrei, 109–33. Budapest: Akadémiai Kiadó, 1995.

Tomka, Béla. “Személyi összefonódás (interlocking directorates) bankok és iparvállalatok között a századforduló Magyarországán” [Interlocking Directorates between Banks and Industrial Enterprises in Hungary at the Turn of the Century]. Replika 25 (1997): 37–46.

Tomka, Béla. Érdek és érdektelenség. A bank-ipar viszony a századforduló Magyarországán, 1892–1913 [Interest and Disinterest. The Relationship between Banks and Industry in Hungary at the Turn of the Century, 1892–1913]. Debrecen: Multiplex Media–DUP, 1999.

Tomka, Béla. “A magyar malomipar finanszírozása (1895–1913)” [The Financing of the Hungarian Milling Industry (1895–1913)]. Korall 4, no. 14 (2003): 79–97.

 

Translated by Thomas Cooper

1 Rostow’s definition of the “leading sector” does not actually fit the milling industry in Hungary, since the drawing effect it exerted on other branches of industry was much more moderate in comparison with the influence of the English textile industry or the American railway. Walt W. Rostow, The Stages of Economic Growth. A Non-Communist Manifesto (Cambridge: Cambridge Univ. Press, 1990), 194. At the same time, Fogel throws into question the emphasis on a single branch of industry as a generative force for economic growth. According to Fogel, the concept of a “leading sector” represented little more than “the hero theory of history applied to things rather than persons.” Robert W. Fogel, Railroads and American Economic Growth: Essays in Econometric History (Baltimore: John Hopkins Press, 1964), 236.

2 Milling that was done for commerce, in other words production of flour sale, was characteristic of only a minority of mills at the end of the nineteenth century in Hungary. Of the steam mills, there were some enterprises that did milling for multure (i.e. for a fee), for the most part in small settlements in the countryside. In these cases, the mills would grind the raw materials in exchange for a share of the milling product. In contrast, the Budapest steam mills ground grains that they had purchased themselves, and they sold the milling product with the assistance of a network of agents.

3 For an analysis of the circumstances of the enterprises in these two decades, including costs and earnings, see Judit Klement, Hazai vállalkozók a hőskorban. A budapesti gőzmalomipar vállalkozói a 19. század második felében (Budapest, Eötvös Kiadó, 2012), 41–50.

4 1869 and 1873 bore witness to the fall of only a few enterprises, but in every case the mills were then kept in operation by new companies. See Judit Klement, “Válság egy húzóágazatban – a 19. századi malomipar példája,” in Gödörből gödörbe. Mindennemű válságok Magyarhonban a 19. és 20. században, ed. Csaba Katona (Szombathely: Mediawave Közalapítvány–Vas Megyei Levéltár, 2011), 79–90.

5 A few examples from the secondary literature: Andor Löherer, Gazdasági válság és a búza árhanyatlása Magyarországon. Okai, eredményei és orvosszerei (Budapest: Pátria, 1896); Pál Sándor, A XIX. század végi agrárválság Magyarországon (Budapest: Akadémiai Kiadó, 1958); T. W. Fletcher, “The Great Depression of English Agriculture 1873–1896,” Economic History Review, New Series 13, no. 3 (1961): 417–32; Kevin H. O’Rourke, “The European Grain Invasion, 1870–1913,” The Journal of Economic History 57, no. 4 (1997): 775–801.

6 “By 1882 Minneapolis was already producing 3 million bushels of flour annually. By 1885 the output had risen to 5 million and by 1890 over 7 million.” Alfred D. Chandler, The Visible Hand. The Managerial Revolution in American Business (Cambridge–London: Belknap, 2002), 253.

7 Vilmos Sándor, Nagyipari fejlődés Magyarországon. 1867–1900 (Budapest: Szikra, 1954), 300–08; László Katus, “Magyarország gazdasági fejlődése (1890–1914),” in Magyarország története 1890–1918. vol. 1 of 7, ed. Péter Hanák (Magyarország története tíz kötetben) (Budapest: Akadémiai Kiadó, 1978), 293–96.

8 Charles Kuhlmann, The Development of the Flour-Milling Industry in the United States with Special Reference to the Industry in Minneapolis (Clifton: Augustus M. Kelley, 1973), 104–54. See also the article by Ágnes Pogány in this issue: Ágnes Pogány, “Crisis Management Strategies after World War I. The Case of the Budapest Flour Mills,” Hungarian Historical Review 4, no. 4 (2015): 868–99.

9 “The ‘new process’ mills, as they were known, produced high-quality flour in high volume and at low unit cost.” Chandler, The Visible Hand, 251.

10 Report on the Production of Agriculture as Returned at the Tenth Census (June 1, 1880), Department of the Interior, Census Office, vol. 12, (Embracing general statistics and monographs on cereal production, flour-milling, tobacco culture, manufacture and movement of tobacco, meat production) (Washington: Government Printing Office, 1883), 572.

11 Katus, “Magyarország gazdasági fejlődése (1890–1914),” 384 f.

12 The expression was introduced by György Kövér, A felhalmozás íve. Társadalom- és gazdaságtörténeti tanulmányok (Budapest: Új Mandátum Kiadó, 2002), 306.

13 On the importance of the processing trade to the milling industry see Judit Klement, “Az őrlési forgalom jelentősége a fővárosi malomvállalatok nézőpontjából,” in Piacok a társadalomban és a történelemben, ed. Károly Halmos, Zsuzsanna Kiss, and Judit Klement (Rendi társadalom – polgári társadalom 26) (Budapest: Hajnal István Kör, 2014), 211–20.

14 The processing trade could also involve other milling, finishing, and repairing work. The production of threads and fabrics, for instance, was a major area of the processing trade. The institution (in German Mahrlverkehr) had been introduced in Germany in 1881, thus the trade of duty-free goods between Germany and Austro-Hungary was subject to 1881 regulations that preceded the 1882 law of the Austro-Hungarian Monarchy.

15 Since 1850, Hungary had been part of the common customs of the Habsburg Empire, and this did not change with the Compromise of 1867. Customs duties were established collectively by both parties. This was true in the case of the 1882 law as well.

16 Minister of Finance General order number 30,974 of May 29, 1882 “on the handling of grains brought in for grinding or taken out of the customs zone.” Rendeletek Tára (1882): 665–68.

17 Emil Bacher, A magyar malomipar (Budapest: Károlyi György kő- és könyvnyomdája, 1911); Endre Bosányi, A malomipar szerepe és jelentősége közgazdaságunkban (Budapest: Pesti Könyvnyomda Rt., 1892); Konrád Burchard-Bélaváry, A malomipar az ezredéves országos kiállításon (Separate print from the eighth volume of Sándor Matlekovits’s exhibition entitled “Az ezredéves kiállítás eredménye”) (Budapest: Pesti Könyvnyomda Rt., 1898); Ignác Fekete, Az őrlési forgalom (Budapest: Pesti Könyvnyomda-Részvénytársaság, 1900).

18 Since Austria and Hungary were part of a common customs area and the question of the processing trade was one of the questions of customs duties (since the duties were refunded), the processing trade was an issue that had to be addressed collectively. This is why it ended up on the agenda of the economic compromises that were negotiated every ten years in order to address common economic questions.

19 Henrik Gärtner, “A budapesti malmok jövedelmezősége és az őrlési forgalom,” Közgazdasági Szemle (1910): 775–95.

20 I offer a detailed presentation of the methodologies of the study of the results of the business ventures and an examination of the results themselves here: Judit Klement, “Die Agrarkrise am Ende des 19. Jahrhunderts und die Budapester Mühlenindustrie,” in Krisen/Geschichten im Mitteleuropäischem Kontext. Sozial- und Wirtschaftsgeschichtliche Studien zum 19./20. Jahrhundert, ed. Márkus Keller, György Kövér, and Csaba Sasfi (Vienna: Institut für Ungarische Geschichtsforschung in Wien, 2015), 167–97.

21 This period of upswing in the early 1890s had a smaller effect on profitability. The upswing was significantly smaller.

22 For a study of the shareholdings that brought in above-average earnings see Katalin Mérő, “Részvényárfolyamok alakulása a budapesti értéktőzsdén, 1864–1943,” Statisztikai Szemle 65, no. 12 (1987): 1239–59.

23 For a study of the credit framework of the bank, see Kövér, A felhalmozás íve, 298–308.

24 Béla Tomka has also studied the gradual process of indebtedness that hit the Budapest milling companies at the end of the nineteenth century: Béla Tomka, “A magyar malomipar finanszírozása (1895–1913),” Korall 4, no. 14 (2003): 79–97.

25 For more on this see Ágnes Pogány, “Crisis management strategies after World War I.”

26 To draw on Rostow’s notion of stages of economic growth, the Budapest milling industry went beyond the stage of rapid growth, since “deceleration is the normal optimum path of a sector.” Walt W. Rostow, The Process of Economic Growth (New York: W. W. Norton & Company Inc. 1962), 308.

27 Cooperation between the milling enterprises of Budapest was ineffective in another area as well. In the early 1880s, the idea came up of creating, collectively, a pension fund for the white-collar workers of the Budapest milling enterprises. However, the initiate was rapidly dropped and the companies dealt with their employees on their own, not as part of a larger cooperative effort.

28 As Vilmos Thernesz observes, this was a concentration of enterprises with a de-concentration of production. Vilmos Thernesz, “Magyar malomipar helyzete a 20. század első felében,” in Műszaki innovációk Magyarországon, ed. Walter Endrei (Budapest: Akadémiai Kiadó, 1995), 109–33.

29 Most of the people will not be named here in the interests of brevity and space. For the details, see Judit Klement, “Vállalatok hálózatban. Vállalati kooperáció a 20. század elején a budapesti gőzmalomiparban,” Korall 50 (2012): 82−106.

30 In the Hungarian companies, as was the case in Germany and Austria, the board of directors and the supervisory board or committee were two separated corps. The board of directors was responsible for the strategic leading of the company, while the supervisory board inspected whether the operation of the company was appropriate to the interests of shareholders and the law. The members of both committees were elected by a general meeting of the company for a given period and for a given remuneration. Their duties, election and benefits were regulated in the articles of association of the company.

31 After 1904, the board of directors of the Lujza Steam Mill Company numbered between seven and nine people. The supervisory committee was consistently made up of four people. Budapest Főváros Levéltára (= BFL) BFL VII.2.e. Cg. 1224/675, 676, 667, 668.

32 BFL VII.2.e. Cg. 1193/715. Articles of association of the Erzsébet Steam Mill Company following the amendment of 1912.

33 BFL VII.2.e. Cg. 1211/1. 712. d.

34 BFL XI.1005. 5. d. Board of directors’ report appended to the regular general meeting of February 15, 1904. (Display setting in italics is mine).

35 The Pest Millers and Bakers’ Steam Mill Company was commonly known by the name Bakers’ Mill, since the enterprise had indeed been founded by millers and bakers.

36 Tőzsdelap, 1900–1904.

37 On the uses and limitations of this kind of source see György Kövér, “A részvényesek névjegyzéke mint társadalomtörténeti forrás,” in Kutatás – módszertan, ed. Gyula Erdmann (Rendi társadalom – polgári társadalom 2.) (Gyula: Hajnal István Kör, 1989), 118–24. In the case of the Budapest steam mill joint stock companies, on average one-third of the shareholders attended the general meetings with their shares. For precise details see Klement, Hazai vállalkozók a hőskorban, 163–71.

38 BFL VII.2.e. Cg. 1211/1. 712, 762, 763. d; Cg. 1224/675, 676, 667, 668.

39 Kövér, “A részvényesek névjegyzéke mint társadalomtörténeti forrás,” 123.

40 By name: Lajos Gerisch, Károly Haggenmacher, Kálmán Kovácshegyi, Jakab Lang, Ede Langfelder, Ottó Mayer, Rezső Renschler, Jakab Schuk.

41 By name: Sándor Deutsch, Vilmos Leipziger, Miksa Löwy, Henrik rátonyi Reusz.

42 For more on Lánczy’s life and career see Károly Halmos, “Lánczy Leó. Hagyomány és nonkonformizmus egy bankvezér történetében,” in Sokszínű kapitalizmus. Pályaképek a magyar tőkés fejlődés aranykorából, ed. Marcell Sebők (Budapest: KFKI Csoport – HVG Könyvek, 2004), 180–95.

43 Zsidó lexikon, 1929 (the entry on Fellner).

44 “The increase in share capital that was agreed on during the general meeting held on November 6, 1911 has been accomplished through the issue of 2,875 new shares at a nominal value of 500 crowns each. This year, an increased share capital of 6,500,000 also appears on our balance sheets. The acquired shares in the Erzsébet Steam Mill Company are included in the ‘securities-receipt,’ and the earnest that came in on the 1,013 newly issued shares of stock that was issued for the old shareholders was used to cover the refund of interest and add to the reserve funds, after the costs that arose had been deducted.” (BFL XI.1005. 5. d. Display setting in italics is mine). One can only hypothesize, on the basis of this, that 1,862 new shares of First Budapest stock were used in order to obtain, through exchange the Erzsébet stock. Using the market prices as the basis for comparison, they must have asked for at least three and possibly four shares of Erzsébet stock in exchange for one share of First Budapest stock. The nominal value of one share of Erzsébet stock was 400 crowns. In December 1911, the stock closed at a price of 450 crowns. One share of First Budapest stock, with a nominal value of 500 crowns, was being traded at 1,690 crowns on the market at the same time. (Tőzsdelap, 1911).

45 József Radnóti, Pesti pénzoligarchák (Budapest: May János Nyomdai Műintézet, 1929). Chapter on Weisz.

46 I would like to express my sincerest thanks to Konrád Reuss for this document, which remains in his possession today. The italics in the citations from the document are my emphasis.

47 For more on the Burchards and the history of the Rolling Mill, see Klement, Hazai vállalkozók a hőskorban, 212–39. Konrád Burchard-Bélaváry was the president of the Rolling Mill Company. His sons were members of the directorate. Rezső was on the board of directors and was also the vice president of the company. Andor was on the board of directors and also served as managing director.

48 Tőzsdelap, 1910–1916.

49 Were Konrád Burchard-Bélaváry to resign or die, his place on the First Budapest Board of Directors was to go to his son, Rezső. As it so happened, Konrád, the president of the Rolling Mill Company, died in June of that year of colon cancer. In other words, in February he may already have known that he was dying.

50 The presidents of joint stock companies were always members of the board of directors, and the articles of association specified their remuneration. The fact that there is mention in the document of an honorarium suggests that they had reached an agreement with Rezső Burchard-Bélaváry concerning a sum that was to be paid in addition to the payment he would receive as a member of the board, perhaps in exchange for his help in bringing the negotiations to a fruitful close.

51 Every transaction involving securities had costs. For instance, when a buyer purchased registered shares of stock, the transfer of the stocks to the name of the buyer had a cost per share, which was paid by the buyer. In this case, the Commerce Bank and First Budapest agreed to cover all of these kinds of additional costs.

52 National cartels were not at all rare things at the time: Harm G. Schröter, “Cartelization and Decartelization in Europe, 1870–1995: Rise and Decline of an Economic Institution,” The Journal of European Economic History 25, no. 1 (1996): 129–53.

53 Béla Tomka uses this term to designate the relationship between Lujza and First Budapest. He examined the question from the perspective of the Hungarian Commerce Bank of Pest. Béla Tomka, Érdek és érdektelenség. A bank-ipar viszony a századforduló Magyarországán, 1892–1913 (Debrecen: Multiplex Media–DUP, 1999), 128.

54 For more on the circumstances and conditions in Hungary see Ágnes Pogány, “Bankárok és üzletfelek. A Magyar Általános Hitelbank és vállalati ügyfelei a két világháború között,” Replika 25 (1997): 55–66; Béla Tomka, “Személyi összefonódás (interlocking directorates) bankok és iparvállalatok között a századforduló Magyarországán,” Replika 25 (1997): 37–46; Tomka, Érdek és érdektelenség.

55 Ibid., Érdek és érdektelenség, 179. The lists of First Budapest stock consignments only survived up until 1892.

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